- The NASDAQ 100 has rallied a bit during the trading session on Thursday as we are trying to recapture the 50-Day EMA.
- With that being said, the market has been forming a bit of a broadening wedge, which is a sign of increased volatility, and potential trouble.
- I think it’s probably only a matter of time before we see some type of decision as we are in a broadening wedge. A broadening wedge typically means that the market is trying to figure out what it wants to do with itself, and generally, that is assigned to negativity.
Having said that, we have the CPI numbers coming out on Friday, and that probably is going to be the main driver over the next 24 hours. The market is likely to also look ahead to the Federal Reserve meeting next week as well, as traders on Wall Street are looking for that “monetary methadone” that they have had for the last 13 years. The market has been pumped up with so much liquidity that it has a couple of generations of traders that have never really had to deal with the environment we are in. That’s part of what’s been going on for a while, as we are watching traders who truly believe that the Federal Reserve is there to keep the market afloat put money to work.
Erratic Behavior Ahead
Furthermore, it’s the end of the year so you must keep in mind that a bit of “window dressing” is going to come into the picture as traders and fund managers will need to let their clients know that they hold all the proper assets. After all, a lot of funds have taken a massive beating this year, with a lot of them being down something like 30%.
Because of this, it’s very likely that we continue to see a lot of erratic behavior, especially as illiquidity will become a major issue, especially after the Federal Reserve meeting next week, which will be the last major data point to deal with. Do not doubt that there could be a “Santa Claus rally”, but I also would not doubt that we could break down rather significantly as well. In the meantime, I think we continue to bounce around in the same general vicinity.
Ready to trade the NASDAQ 100? We’ve shortlisted the best CFD brokers in the industry for you.