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I still look for signs of exhaustion to sell into at this point.
The NASDAQ 100 initially rallied on Wednesday but gave bank gains to show signs of weakness again. That being said, we are in a consolidation area that is well defined and will probably hold until we get the CPI figures on Friday. After all, the world is paying close attention to inflation in the United States and what the Federal Reserve will do as a reaction.
Looking at this chart, we have been in a massive downturn, with the 50-day EMA now sitting at the 13,000 level as well. Because of this, the market is likely to see any rallies rejected just as we have over the last week or so. Ultimately, if we cannot get above the 13,000 level, there’s no hope of a breakout rally coming. Even if we do get above there, I see a lot of resistance on the way to at least the 13,500 level. It is at that point where I might consider buying the NASDAQ 100 index, but I would also need to get the CPI numbers out of the way, and perhaps get a bit of a hint that the Federal Reserve is willing to step back on its tightening.
Pay attention to the bond market, because if the interest rate suddenly collapses, then it’s likely that we could see a significant amount of relief in the NASDAQ 100. After all, the market is likely to continue seeing the usual influence of rates on technology stocks. If rates fall, then it’s likely that we will see a lot of bullish pressure in this market, but keep in mind that the exact opposite can happen. Because of this, it is very important to keep the idea of correlation in mind. If we break down below the 4400 level, then it’s likely that we can look into the 12,000 level again, and then possibly the 11,500 level after that. Anything below that level will continue the overall negative attitude in this market.
Without some help from the Fed, I just don’t see how the NASDAQ 100 suddenly picks up. I do think that eventually, we could get a nice opportunity, but we are nowhere near it right now, so I still look for signs of exhaustion to sell into at this point. Inflation lis ikely to continue roaring, so that could be something worth paying attention to.
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