• The natural order of indices is to go higher over the longer term, although Tuesday did feature a bit of a short-term pullback. The Nasdaq 100 has tried to rally, and it is quite interesting that we have because it looks like we are hanging about in a bullish flag. 
• This suggests that it is probably only a matter of time before we break out to the upside.
• There is a short-term downtrend line that sits just above the daily range, and quite frankly the CPI number could be the catalyst on Wednesday.

Freepik

On Wednesday, we will get the Core CPI figure from the United States, expected to come out as 0.2% month over month. If that CPI number is less, then it could be like rocket fuel for the Nasdaq 100 as traders will then begin to think about the possibility that the Federal Reserve will have to loosen monetary policy much quicker than they are stating, and of course, Wall Street will run without narrative. If CPI comes out hotter than anticipated, we may have to “reset” near the 14,600 level underneath. The 50-Day EMA as broken above the 15,000 level, which was a previous level of interest, and now it looks like it’s going to go racing toward the 15,250 level to solidify that potential support level.

Short-term Pullbacks Continue to Offer Buying Opportunities

Looking at this chart, you could make an argument for a bullish flag that suggests we are going to go close to the 18,000 level, and although that is an extraordinarily large target, quite frankly, it only takes a handful of stocks to move the Nasdaq 100 higher. Tesla, Microsoft, etc. will all be the main drivers. In fact, you could probably go so far to call this the “Nasdaq 7.”

Short-term pullbacks continue to offer buying opportunities, and I do not have any interest in shorting the Nasdaq 100 anytime soon, at least not until we break down below the 50-Day EMA at the very least, and quite frankly it also has to look at the overall monetary policy situation, because it is what the Federal Reserve does as far as liquidity the drive stocks now, not so much anything to do with the companies that make up the index. It’s all about liquidity, as we have been in a realm of quantitative easing for well over a decade that has suddenly stopped.

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