NASDAQ 100 Forecast: Accelerates to the Outside After CPI

Hope burns eternal and Wall Street is always looking for the next narrative. The 7.7% year-of-year inflation is a lot hotter than what the Federal Reserve is comfortable with, which is closer to 2%.

Because of this, it’s very likely that the Federal Reserve will continue to remain very tight, even if the actual interest rate itself is accelerating at a slower pace. It is likely that we see the Federal Reserve remain tight for longer, and therefore it’s likely that we see the market fade this rally eventually, especially as we are running into an area that seems to be resistive, to begin with. That’s not to say that we don’t have an opportunity for a bit of a rally at this point, but I think it is more short-lived than anything else.

You can make an argument for a little bit of a double bottom recently, but at this point I think it’s very difficult to get overly bullish from the longer-term standpoint, considering that the overall economic picture is still very bleak. I think this is just simply going to be another bear market rally that sucks a lot of people into the market, only to chew them back out. Whether or not people are willing to hold on through the weekend is also a very interesting question, which we may find out rather soon. If they do hang onto it through the weekend, then this short-term rally has more legs. If they do not, then it’s likely that we drop back down to the 11,000 level given enough time as it would open up the possibility of consolidation.

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