Quite frankly, as shaky as the world is right now it would not take much imagination to come up with a couple of different scenarios that could make that happen, but we just don’t know about the timing.
- The NASDAQ 100 has fallen a bit during the Friday session as it looks like we are getting ready to turn a little bit lower as we have struggled to continue the upward momentum.
- After all, we had seen the CPI numbers come in lighter than expected last week, and then stocks went straight up in the air.
- The market is likely to continue going higher, right?
Stock markets are crashing again
The market has not done that, even though you would expect it to. The market has simply gone nowhere, which tells me that perhaps there is no real follow-through getting ready to happen. At this point, the market is likely to pull back at the first signs of serious trouble, and if we break down below the 50-Day EMA, it’s possible that we could drop down to the gap underneath, near the 11,000 level.
Looking to Fade Rallies
You can also make an argument that there is a bit of a target to the upside in the form of the 200-Day EMA, but I don’t necessarily think that’s going to happen easily. Granted, Wall Street continues to look for some type of Hopium cap rally, as they wait for Jerome Powell to come to save everyone. The fact that the Federal Reserve is done that for 14 years has created this mess, so now they worry about their credibility, meaning that they are going to stick to their guns on tight monetary policy going forward. If that’s going to be the case, then stocks will get pummeled.
You can make an argument that the rising wedge-shaped pattern could kick off as well, sending this market back down to the lows. Breaking down below that level, then it’s possible that we could go down to the 10,000 level. I don’t necessarily think that’s going to be easy to happen, but all we would need is some type of catalyst. Quite frankly, as shaky as the world is right now it would not take much imagination to come up with a couple of different scenarios that could make that happen, but we just don’t know about the timing. At this point, I still believe that fading rallies will probably be the easier way to go, so therefore you need to look at the market in that scenario.