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Gravity is calling in the short term, and therefore it’s going to be difficult to fight the coming downward pressure.
- The NASDAQ 100 Index has fallen a bit during the trading session on Monday, after forming a pair of shooting stars on the daily chart last week.
- At this point it looks like a lot of risk appetite is being threatened, so you need to look at this through the prism of the NASDAQ 100 perhaps getting hammered as a result.
- Furthermore, the jobs number last week drove home the idea that perhaps the Federal Reserve has a lot of work ahead of it, and therefore it’s difficult to imagine a scenario where we suddenly see a lot of risk appetite being taken.
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NASDAQ 100 Is Oversold
Beyond that, the market is a little oversold and a pullback does make a certain amount of sense, so you need to look at it through that prism as well. With that being the case, it’s very likely that we will see a lot of reasons to pullback, if for no other reason than to take profit in an uncertain environment. The market will continue to be very noisy, and probably focus on the 200 day EMA underneath which is near the 12,140 level. Breaking down below that level does open up further selling pressure, perhaps down to the 50-Day EMA.
On the other hand, if we were to take out the top of the 2 shooting stars from last week, that would be an extraordinarily bullish sign. That being said, with the volatility that we have seen, it’s very likely that we will only see more, and therefore you should be very cautious with your position sizing in this type of erratic environment. I do think that it is probably only a matter of time before we fall, as we have also failed at a significant high on the chart as marked by the blue circle.
Wall Street has his amazing ability to ignore reality, so I would anticipate that it’s only a matter of time before we get the next narrative to follow, but gravity is calling in the short term, and therefore it’s going to be difficult to fight the coming downward pressure. You should also be aware the fact that we are in the midst of earnings season, which of course has its own dangers that it brings to the market as well. Regardless, caution is the better part of valor now.
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