- Yet again, we find the NASDAQ 100 reaching the 25,000 level early during the trading session on Thursday, but as we had seen on Wednesday, and to a lesser extent on Tuesday, this is an area that offers a massive amount of resistance.
- It is a large, round, psychologically significant figure, so I think that it comes into play as well.
- That being said, the thing that I am paying the most attention to is that we are trying to chip away at the massive selling that occurred last Friday, which was just above that level, and I think we have a lot of work to do to get through there. If we do, that would be an extraordinarily bullish sign.
Momentum
Keep in mind that the NASDAQ 100 is all about momentum, and probably not a whole lot or at this point. After all, the NASDAQ 100 has been captured by a handful of stocks, known as the “Magnificent 7”, and this of course means that the market is driven by just a handful of stocks that almost everybody is involved in. In other words, names like Nvidia and Tesla have to do fairly well in order to send this market higher. Unfortunately, investment concentration has been a fact of life recently, as most people are involved in “passive investing”, and those passive instruments tend to all invest in the same companies. In other words, the index is no longer an “index of 100 companies”, rather an index of 7 companies with 93 others that have a little bit of influence.
It’s worth noting that both Tesla and Nvidia are struggling a bit during the trading session, but they aren’t necessarily falling apart. I do believe that we continue to grind higher at this point, and we should be watching the 50 day EMA at the 24,150 level, that is rising. There’s an uptrend line underneath there as well, so all things being equal we do have a floor in this market.
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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.
