The NASDAQ 100 has pulled back again during trading on Tuesday, as it approaches a somewhat significant support region near the 12,150 level. This area has seen a lot of noise in the recent past, from both a support and resistance standpoint, so a bit of “market memory” may come into play.
Keep in mind that the world is most certainly watching risk appetite in general right now as central banks around the world continue to cite monetary policy. This tends to have an outsized effect on technology stocks, which of course the NASDAQ 100 is comprised of. Tighter monetary policy conditions tend to make for less money for investment.
Looking at this chart, the 50-Day EMA sits just below the 12,000 level and is rising, perhaps trying to meet the market for some type of confluence. If and when the market were to test the 50-Day EMA, a certain amount of technical trading will almost undoubtedly happen there. On the upside, if we were to take out the 12,365 level, it suggests that perhaps the NASDAQ 100 is not done consolidating, but it must be kept in the back of your mind that recently we have seen a couple of rather ugly candlesticks. In other words, the volatility is probably picking up, not getting better.
With that being said, you also need to keep in mind that it happens to be earnings season. Earnings season will have its own volatility as well, so keep in mind that you will have to pay attention to what companies are announcing earnings before and after the bell. Wednesday also has the Federal Open Market Committee Meeting Minutes coming out, which is the notes of the last Federal Reserve interest rate meeting. Traders will be paying close attention to that for hints on whether or not the Federal Reserve is becoming more hawkish, or dovish. This comes out at 2 PM New York time, so a little bit of volatility would be expected right around that time as well.
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