NASDAQ 100 likely to be a harbinger.
The NASDAQ 100 will be crucial to watch over the next couple of days as it has broken down significantly during the trading session. In fact, it is much more bearish looking than the S&P 500 so it could dictate where the markets in general go next. Even if you are not trading this market, you should be paying attention to what happens here. This seems to be a bit of a harbinger as to what happens next and considering that it is much more bearish looking than the S&P 500, if it continues to go lower one would have to think that it’s only a matter time before the S&P 500 follows. The same can probably be said for the Dow Jones Industrial Average as well.
The 50 day EMA has been sliced through, and therefore it is very negative looking. The 200 day EMA underneath at the 7500 level should offer support, but at this point it’s very unlikely to be that simple. At this point, we have to wait for the next Tweet or headline to turn things around so that we can rally again. This is essentially what we have been broken down to, waiting for the next political theater to happen.
During the Friday session it was announced that the United States was looking into the idea of stemming capital flow into Chinese companies, so therefore a lot of technological companies got hammered. Whether or not this sticks for a longer-term move is a completely different question, but quite frankly it’s something that they are just looking into so therefore it’s probably going to blow by rather quickly and be forgot by the time we get into the next week.
With that being the case, I believe that the market will try to make a move towards the 8000 level but obviously it’s going to be very difficult to get there. Expect a lot of volatility, but we continue to see is an uptrend in this market, although it should be noted that the most recent high is lower than the one before it, so if I were to take a long position I would probably do so in the S&P 500 and not necessarily here. That being said, I would certainly keep an eye on this chart because it will lead the way. If we recover the 50 day EMA again, then stock market should in general move in the same direction.
