- The Nasdaq 100 has gapped to kick off the session on Monday and then slammed into the 200 day EMA.
- At this point, it'll be interesting to see how this plays out, but I think you've got a situation where traders are looking at this through the prism of whether or not they can continue to push higher.
- After all, the NASDAQ 100 has been oversold for a while.
So, the question now is whether or not there's any follow through. The follow through could lead this market to the 20,400 level, but ultimately, I think you have to understand that we are still very much in a downtrend and even breaking above the 200 day EMA doesn't necessarily mean that the downtrend's over. I think you have to understand also that there is a lot of fear out there and that will continue to be a major problem.
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With this type of environment, you do need to be somewhat cautious, but it's clear that the short sellers are starting to get blown out. You could see a bit of a short selling squeeze here, forcing prices higher. And if we can get a daily close above the 200 day EMA, I think that does in fact suggest that we have further to go.
On a Break Higher
In that environment, I like the idea of buying for a short term move towards the 50 day EMA, possibly the 21,000 level, but we need to see more risk on behavior. It has been stated by the Trump administration that a lot of the tariffs that are coming are going to be more targeted. And it seems like the market likes that idea. In this environment, that might be just enough to get the short sellers to step off the gas and let the buyers come in and pick the market up.
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