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I do think that given enough time we may have to test the top of the shooting star from the previous session on Tuesday, and if we can break above there then it opens up the possibility of a move to the 15,000 level.
- The NASDAQ 100 has fallen a bit during the trading session on Wednesday, after forming a massive and obvious shooting star on Tuesday.
- This is not a huge surprise, because quite frankly we have gotten so far ahead of ourselves that we need to pull back.
- Whether or not this is going to be a significant pullback and perhaps even trend change is quite a bit to ask at this point, but we are overdone to the upside, and it does make sense that we would need to at the very least pullback to find buyers.
The 13,750 level remains an area of interest for me, and of course, we have the 50-Day EMA sitting right around the 13,300 level and rising. Furthermore, you can even make an argument that the 14,000 level could offer a bit of support, so I think at this point in time the market is likely to see value Hunter sooner or later, but as the market got so ahead of itself, this is a completely healthy thing to happen.
I do think that given enough time we may have to test the top of the shooting star from the previous session on Tuesday, and if we can break above there then it opens up the possibility of a move to the 15,000 level.
Nonetheless, this is a situation where I think we continue to see a lot of trouble out there, and therefore I think the volatility alone will have people taking advantage of this move. Furthermore, the market also has a significant amount of overperformance by just a handful of companies, which is a major problem with trading the NASDAQ 100 in general as it is generally 7 stocks that move everything. As long as retail traders are chasing weekly call options in companies like Tesla, that can add a little bit of a floor in the market.
If the NASDAQ 100 were to break down below the 13,500 level, that could be the beginning of a trend change, but right now I think this is just a simple opportunity to pick up a little bit of value, but ultimately this is a situation where a little bit of patience might go a long way.
Potential signal: If the NASDAQ 100 pulls back anywhere near the 14,000 level, I will start “scaling in” at that point. The stop loss would be 13,900 level, with a target of 15,050 above.
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