Tests a Major Resistance Level

All things being equal, this is a market that continues to see a lot of choppy behavior, but it’s also worth noting that the area just above current trading is a significant resistance. 

• The NASDAQ 100 initially rallied during the trading session on Wednesday, despite the fact that PPI came out at almost twice what was anticipated.
• Because of this, it’ll be interesting to see how the Thursday session plays out as we have a significant amount of inflation information coming out in the form of the CPI numbers in America.
• CPI is a major factor in how inflation is looked at in the United States, as it is a consumer-driven economy.

The NASDAQ 100 has the “magnificent 7”, or as Keith McCullough calls it, “The Magnificently Manipulated 7.” It happens to be one of my favorite names at the moment, due to the fact that everybody flows into the same stocks, which happened to be the biggest part of the NASDAQ 100 as they are passively invested into by just about any mutual fund or ETF that you can be involved in. Because of this, it gives a little bit of a false reading on the index, as it is not an equal-weighted index.

That being said, if we start to see trouble in stocks like Nvidia, Microsoft, Alphabet, etc., is likely that the NASDAQ 100 will get absolutely lambasted. The 50-Day EMA below offers significant support, and I think you need to pay close attention to it, as it could be a technical support level. It will break down below there, then it’s likely that the market could go down to the 14,600 level underneath which is a major support level. All things being equal, this is a market that continues to see a lot of choppy behavior, but it’s also worth noting that the area just above current trading is a significant resistance. That extends all the way to the 15,600 level. In other words, I think it’s much easier to pull back than it is to go higher.

This is not to say that the market will collapse right away, but rather that it’s probably due for some type of pullback. That being said, and a lot of this will come down to what happens with the CPI numbers, because if they are cool, that has Wall Street ringing the cowbell for quantitative easing, or at least a normalization of interest rates. Unfortunately, we are still held hostage by 7 stocks, and the bond markets, and once you understand that the market becomes a little easier to deal with.

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