Nasdaq 100 Forecast: Index Pulls Back To The 50-Day EMA

The Nasdaq 100 had a very rough trading session during the trading session on Tuesday to fall all the way down to the 13,500 region. This also features the 50-day EMA, so it makes sense that we would see a little bit of stability here. That being said, there is a major uptrend line that is coming up as well, so I look at this pullback as a potential buying opportunity more than anything else. Keep in mind that the Nasdaq 100 (NDX, QQQ) is rather interest-rate sensitive, so if interest rates take off, you may see a little bit of hesitancy in this market.

Nasdaq, Index, Indices, Stock Exchange

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The 14,000 level above has been very difficult to break above, so pulling back probably will lead to an opportunity to build up enough momentum to go higher. After all, all of that inertia had to go somewhere, and it looks like it will go into selling. Nonetheless, I have no interest in shorting, even though quite often we will see a continuation after a move like this. I simply will sit on the sidelines and wait for an opportunity to get long of a market that has been bullish for quite some time. I need to see a daily bullish candlestick or some type of supportive candlestick along the lines of a hammer.

If we do turn around and break above the 14,000 level, it is very likely that we will go looking towards the 14,500 level next. The 14,500 level is an area that would offer a certain amount of psychological resistance, but I think it opens up a move towards the 15,000 level which is a longer-term target of mine. This is a market that I think continues to attract a lot of value hunting, as it is being supported by the Federal Reserve via liquidity measures. Furthermore, the market is driven by just a handful of stocks, so if the big names in technology start gaining, this index will go higher based upon the asymmetric weighting of the index itself. If we break down below the 13,000 level, then I would be a buyer of puts, but that is about as bearish as I would get over here, as the Nasdaq 100 has been so strong for so long.

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