- The NASDAQ 100 Index gapped higher to kick off trading on Monday, and never look back.
- We are above the 11,000 level, and it’s likely that we will continue to at least try to rally from here.
- The market does have a recent history bias of falling quite hard, bouncing significantly, and then selling off yet again.
Earnings Season Impact
There has been a lot of noisy behavior over the last several weeks, and I think that will continue to be the case, especially now that we are in the midst of earnings season. Keep in mind that anything can happen as far as the markets are concerned, especially as the earnings season will also include forward guidance, which a lot of people will have to pay close attention to. The idea that forward guidance would be good is a bit laughable, but you never know. Interest rates continue to rise, and that will almost certainly have quite a bit of negativity flowing towards technology stocks like we have here in the NASDAQ 100, and as long as it’s going to be the case, I think you still have the threat of every rally being sold into.
The 50-Day EMA sits near the 11,750 level and is dropping steadily. I think that is a “soft ceiling”, and therefore people will have to pay close attention to it as it is quite often used as a trend defining level. If we can break above the 12,000 level, then we may be on to something as far as a bullish market is concerned. That being said, the market is likely to continue to see most rallies as selling opportunities, and it’s difficult to imagine that we are in the type of situation where the market will be extraordinarily resilient in the face of bad news, because there are so many different problems out there that could come into the picture.
Geopolitical problems could continue to be a major problem, and of course the interest rate situation will have to be watched closely. Furthermore, there are hints that the real economy itself is starting to see cracks, and therefore it’s likely that we are going to feel a lot of negative pressure from time to time, and therefore I look at rallies like this as time to simply sit on the sidelines and wait for signs of exhaustion to get involved.
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