NASDAQ 100 runs into major resistance
The NASDAQ 100 broke down a bit during the trading session on Thursday, reaching down towards the 7000 handle as we had a very pessimistic Mario Draghi droning on about global growth, basically blaming most of the European growth problems on exterior factors. With the NASDAQ 100 being so tech oriented, it makes sense that it got hit right along with the other indices.
US/China trade relations
The NASDAQ 100 will be especially sensitive to the US/China trade relations as so many of the companies in this index do business in both countries, quite often splitting their workload between both economies. Ultimately, the failure of a resolution to the situation could cause massive problems for the majority of the big names. With that, you should always pay attention to those headlines as they will cause sudden reactions.
We also have a “golden cross” just underneath, which of course is a longer-term bullish signal. That will attract a certain amount of attention, and as a result it’s possibly going to attract a certain amount of larger flows of funds. However, I would also look at the area of the moving averages crossing as major support. The 7000 level above that area is also supportive, as you can see we have bounced from there towards the end of the day.
The employment figures in the United States come out at 8:30 AM Friday morning, and that of course will have a major influence on the value of the greenback. It will be interesting to see how this plays out, because after the ECB press conference, we have seen massive greenback strength. However, if the jobs numbers end up being rather poor, it could reverse that situation right away, and a weakening greenback could send stocks higher as at this point it seems like Wall Street is looking at “bad news as good news” yet again.
The 7250 level above is significant resistance, as we have seen a couple of times now. The question now is whether or not we can break through it anytime soon? What we can’t say whether or not we will, the reality is that we had recovered so quickly from the massive sell off that perhaps the market just simply needs to take a little bit of time to catch its breath. With major resistance areas like this it’s not uncommon for a need to build up a bit of momentum before the break out.
With the obvious support at 7060 900, it’s very likely that value hunters will return sooner rather than later. The same thing can be said about the S&P 500 and the Dow Jones industrial Average, as they both have support levels just below. As a general rule they all tend to move in the same overall direction anyway, but the NASDAQ has been a bit of a leader recently, so it may be the first place you see markets make a significant move.
Keeping a smaller position might be the best way to go forward in this situation, because quite frankly the volatility is going to be a mainstay of this market. However, there is still an upward bias, regardless of what we have seen over the last 24 hours.