I don’t necessarily think that this market is ready to take off to the upside, and I do anticipate that it is probably only a matter of time before we see sellers come back in and push this market lower.

• The NASDAQ 100 gapped lower to kick off the week on Monday but turned around to show signs of life.
• By doing so, it looks as if we are going to have a short-term relief rally.
• I don’t necessarily think that this market is ready to take off to the upside, and I do anticipate that it is probably only a matter of time before we see sellers come back in and push this market lower.

The 50 Day EMA sits at roughly 12,780, so I think it could offer a little bit of a technical barrier. Signs of exhaustion near that indicator could get me short because I think it might be a nice opportunity. The NASDAQ 100 is going to be very sensitive to a rate-tightening cycle, as so many of the market movers are high-growth companies. Because of this, the market will probably continue to see a huge correlation between rising rates and falling NASDAQ.

NASDAQ Likely to Bounce Back Despite the Noise

Pay attention to the usual 7 or 8 companies, meaning Tesla, Microsoft, Amazon, etc. Those companies move this market, and the other 93 or so don’t really matter most of the time. The market will continue to be very noisy, though I think it’s probably only a matter of time before the sellers come back in and push this market toward the 12,000 level. The Friday candlestick was massive, and it can 6 like that typically do not happen in a vacuum, and therefore I think it’s probably only a matter of time before those who suffered horrific losses that day will be looking to get out of the market as close to as breakeven as they can.

I continue to fade rallies, and I think we are now looking at the next move lower just waiting to happen. If we break down below the bottom of the candlestick on Monday without any type of retrace, that’s probably even more bearish, sending this market further down. Either way, I do not have any interest in buying this market until we can break above the recent high near 13,750. Until then, I’m very leery of rallies and I look at this as a market that needs to prove itself, especially after the tantrum that we saw on Friday. Position sizing will be crucial as usual, as we continue to see a lot of anxiety.

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The euro continues to be noisy, but I still favor the downside more than anything else.

The euro gapped higher to kick off the trading session on Monday but then turned around to fill that gap rather quickly. By doing so, the market has shown just how fragile it is anything remotely close to bullish pressure. A lot of the buying at the open had to do with Emmanuel Macron winning the first round of the French presidential election and looking likely to be Marine Le Pen as well. That being said though, it more than likely will not change the overall trajectory of the euro.

The 1.08 level underneath is massive support, and I think that support is more or less a “zone” that extends down to the 1.05 level. That is an area that has been very noisy for quite some time, and I think it is only a matter of time before we have to test that area again. The price action during the day on Monday did very little during the day to suggest that the market was going to change anytime soon.

Keep in mind that the interest rate differential between the United States and Europe continues to favor the USA, so it should continue to favor the US dollar. I have no interest in trying to fight the overall trend, and with the 50-day EMA breaking through the 1.11 level, is very likely that we will continue to see momentum chasers push this market down.

This is a market that has been going lower for quite some time, so although this could in theory be a “double bottom”, the reality is that it would take a lot to change things. Ultimately, this market would have to show a complete reversal and fundamental conditions would have to back this up. I think a short-term rally from here will more than likely offer a selling opportunity, and I think we will continue to see that being the case.

Alternatively, the market could go back and forth between these two levels, as the euro is likely to be choppy as per usual. After all, that is the typical state of things in the euro, and I just do not see how that will change anytime soon. With this, the euro continues to be noisy, but I still favor the downside more than anything else.