The Nasdaq 100 bounced during the Thursday session, using the 10,700 level as a bit of a support barrier, as we have seen a couple of times in the past. Don’t be ridiculous, don’t jump into this with a ton of money. There are a lot of people out there that are closing out positions because they are not working on Friday, and therefore this could be quite a bit of short covering. Sometimes, I can give you advice that can perhaps make you money, other times, I give you advice and perhaps save you some. This would be the latter of the two, because quite frankly even if we do rally from here, there are a lot of resistance barriers above that could come into the picture.

Another thing to keep in mind is that the lack of liquidity will be a major issue, and therefore it’s likely that we will see erratic moves at best. Some types of news announcements coming across the wire can send the markets into a huge move, mainly because nobody’s involved. Volume and liquidity become very serious problems this time of year, and retail traders have no real way to protect themselves from that other than to use small positions.
 

Volatility Ahead

• Do I think that the market could bounce to the 50-Day EMA over the next couple of trading sessions? Of course, it could, but quite frankly I’m not interested in that move because I also recognize that the jobs number next Friday could send things going right back down.
• Beyond that, any surprise announcement could play havoc with this index.
• It’s just not worth the risk, because Murphy’s Law dictates that if you have a huge position on trying to pick up a few points, something is going to go against you and cause 200. Trust me, I know. I have been there before.

If we do break down below the 10,400 level, that’s a sign that the Nasdaq 100 is going to go much lower longer term, and that would not surprise me in the slightest. We probably have a couple of days’ worth of trading sessions where we just kind of grind it back and forth without any real directionality at this point. That’s typical this time of year.

(Click on image to enlarge)

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