The NASDAQ 100 has gone back and forth during trading on Tuesday as we continue to probe towards lower levels. Now that we are decidedly breaking down, I do think that rallies have to be fêted at the first signs of trouble, but the next couple of days may be a bit quite due to the fact that the entire world will be watching the inflation numbers coming out this week.
The headline number of courses the CPI numbers on Thursday, as it could give us a bit of a “heads up” as to how the Federal Reserve sees the inflationary environment. If they continue to see the inflationary environment as being far too hot, that means that they will continue to tighten monetary policy, which is the death knell for technology stocks.
Looking to Fade Rallies
- Looking at the chart, if we break down to a fresh, new low, then it’s possible that we could see the market drop significantly from here, perhaps down to the 10,500 level. After that, we could see the NASDAQ 100 drop all the way down to the 10,000 handles.
- Rallies at this point should end up being significantly opportunistic for short sellers, with a lot of attention paid to the 11,500 level.
- The 50-Day EMA is now breaking below the 12,000 level and is continuing to show a decidedly negative trend. The overall attitude of this market remains a “fade the rally” type of situation, and I just don’t see that changing anytime soon.
With this being the case, the market is likely to continue seeing the overall attitude deteriorate, and even though things have gotten rather negative, the reality is that markets continue to see a lot of volatility, and therefore you need to be cautious with your position size. This is especially true the NASDAQ 100 that tends to be noisy to say the least. Ultimately, there are only a handful of companies that move this index; therefore, it does make quite a sense that we would see those be closely followed. Those include Tesla, Microsoft, Amazon, and a few others. Looking at the chart, there’s nothing good coming from it and therefore I think we’ve got a situation where we will continue to see plenty of selling opportunities every time, we get a short-term rally that shows the slightest hint of exhaustion.
Ready to trade the NASDAQ 100 Index? We’ve made a list of the best online CFD trading brokers worth trading with.