- The NASDAQ 100 was very noisy during the month of July, initially rallying and making a fresh all-time high, only to turn around and fall apart.
- Because of this, I think we are in the midst of some type of turnaround, but I don’t know whether or not this is going to be a major correction, or if it’s just a typical “run-of-the-mill pullback.”
The market had looked at the 19,000 level as crucial, but as we are approaching the very end of the month of July, it looks like we are going to try to fall through it. If we do, the 18,000 level would be the next target for short-sellers, followed by the 50-Week EMA which is just below there. On the other hand, if we were to turn around and recapture the 19,500 level, then I think you’ve got a situation where the market could go looking to the 20,500 level above, which is basically where we fell apart at.
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It’s Not Really 100 Stocks
The thing about the NASDAQ 100 is that it’s not equal weighted, so it’s not really an index of 100 stocks. Sure, there are 100 stocks that can have a bit of an influence, but the reality is that the NASDAQ 100 has this nasty habit of being driven by 3 or 4 companies at a time. Nvidia was a major driver for a lot of stock market gains in America recently, but that has gone by the wayside. Microsoft of course was a big driver as well, but now it looks like it is not as bullish as it once was.
Ultimately, it’s central bank policies that could come into the picture, due to the fact that a lot of people believe that the monetary policies being loosened could help technology companies, which typically need cheap capital to find venture capital funding. It’s a bit of a downstream idea, but the reality is that if funding becomes very expensive, people are less likely to take risks on some of these technology startups and the overall technology sector in general. Furthermore, artificial intelligence has already grabbed the headlines and now we are waiting around to see what it’s actually going to accomplish. While I don’t necessarily think that shorting the NASDAQ 100 is the way to go, I would not be surprised at all to see a pull back a bit for the month of August.
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