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NASDAQ 100: Bulls Looking for Breakout Beyond 12875, But Fundamental Conditions in Doubt – 16 February 2023

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If the Federal Reserve liquefies the market, everybody buys stocks.

The NASDAQ 100 initially pulled back during the trading session on Wednesday, but then turned around to show signs of life again.Ultimately, it looks like we are trying to break to the upside, therefore it’s possible that we could go looking toward the 12,875 level.Quite frankly, the NASDAQ 100 seems to be ignoring reality and economic numbers, but that’s a huge surprise.


Lately, options traders have been throwing the market around trying to trigger paydays, and therefore we have seen massive intraday choppy behavior. Unfortunately, I just don’t see how you can get away from this type of behavior in the short term, but eventually, somebody somewhere will break something. When that happens, then it ends. When you look at the chart attached, the blue circle shows where I expect to see a lot of resistance. You can also make an argument that perhaps we are forming a bit of a bullish flag, and that of course is something that you need to pay close attention to as well. We are during trying to break out above the top of that flight, which is obviously a good sign.

Should the stock market be doing this with the economy behind it? Of course not, but there is a narrative on Wall Street right now that everything’s going to be great again and it’s probably only a matter of time before the Federal Reserve starts loosening monetary policy. In fact, despite what the Federal Reserve says, the stock market believes that interest rate cuts start coming by the end of the year. That’s been the rub for the last 14 years, we have not had economic reality have anything to do with the stock market, and therefore it’s all about liquidity.

If the Federal Reserve liquefies the market, everybody buys stocks. That’s what they are expecting, so until they are convinced that it’s not going to be the case, it’s difficult to imagine a scenario where stocks go down for a big move. Quite frankly, they are all waiting on “Uncle Jerome” to save the day as he has done multiple times over the last several years. If they ever get the impression that he’s not going to, this market is going to take an absolute beating at that point.

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