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If interest rates start to shoot higher, then it almost certainly will work against the value of the NASDAQ 100.
The NASDAQ 100 did not do too much during the trading session on Thursday, gaining 1%. It was a relatively positive day, but it’s also worth noting that the Chairman of the Federal Reserve speaks Friday morning at the Jackson Hole Symposium, and traders around the world are trying to figure out whether the Federal Reserve is looking to ease its monetary policy.
Inflation data does not suggest that they should be doing that, but the Federal Reserve has created this monster. After all, they have had a long history of making sure Wall Street gets paid, via cheap money. Now that Federal Reserve governors are not allowed to actively trade in the markets, they may not be as inclined. They have created a generation of traders that have no idea what it’s like to trade in an inflationary environment, or trade without the Federal Reserve looking to bail everybody out at the first sign of trouble. In other words, the markets have been so distorted for the last 14 years that it’s difficult to see how we get out of that machine.
Traders Waiting for Jackson Hole Symposium
- Nonetheless, after he speaks during the session on Friday, if we break down below the 50-Day EMA, then it’s possible that the NASDAQ 100 drops to the 13,000 level, possibly even the 12,000 level.
- On the upside, the 13,500 level is an area that has offered resistance previously, so it’s possible that we could see that as a short-term ceiling. If we were to break above there, then that could change things, turning the market into more of a “buy-and-hold” type of situation.
- If that happens, the market is likely to go looking to the 15,000 level. That would also see certain stocks such as Tesla, Amazon, Microsoft, and the like going higher.
If interest rates start to shoot higher, then it almost certainly will work against the value of the NASDAQ 100, and it’s also probably worth noting that we have recently pulled back from roughly the 50% Fibonacci level. This is a market that I think continues to see a lot of volatility, and I’m almost positive Jerome Powell do something to mess this entire situation up one way or the other. Because of this, be cautious about your position size, and recognize that you will need to be very flexible.
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