NASDAQ 100 Forecast: Stalls on Wednesday – 13 October 2022

The NASDAQ 100 went back and forth during the day on Wednesday, and relatively titrating as the markets are waiting on the CPI numbers coming out on Thursday.The Consumer Price Index is a major component of the inflationary gauge that the Federal Reserve will be watching, and therefore I think you get a situation where you must pay close attention to whether the number falls in line.Perhaps in a bit of a preview, the Wednesday session saw the Producers Price Index rise 0.4% month over month, instead of the anticipated 0.2%. If the CPI does something like that, the stock market will take a major punch in the face.

The NASDAQ 100 is best thought of as just a handful of major technology companies in the vein of Tesla, Microsoft, Apple, Google, Amazon, etc. In other words, this is the handful of stocks that move the entire thing. If large-cap stocks in the technology sector do well, so does the NASDAQ 100. However, if they sell off, the other 90 or so stocks don’t really matter. This is because it is not an equally weighted index, and therefore it can be highly influenced by just a couple of companies.

We have made a fresh, new low in the last couple of days, and I think at this point we continue to see a lot of structural downward pressure. The Federal Reserve is nowhere near the end of tightening its monetary policy, and it’s likely that we will continue to see higher risk assets such as stocks suffer. On any rally now, I will pay close attention to 11,600 level, assuming that we can get anywhere near there. The 50-Day EMA sits just below the 12,000 level and reaching towards that area again.

If we do break down from here, then I think we have the possibility of a move down to the 10,500 level. Breaking below the 10,500 level that opens the possibility of the 10,000 level, which could be the longer-term target. The market will not move in one direction forever, so I do expect the occasional bounce to occur. At the first signs of exhaustion, I’m willing to sell and fade those rallies as the NASDAQ 100 does not look healthy at all.

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