- The NASDAQ 100 ascendant during the Friday session to show signs of strength yet again as we are now in uncharted waters.
- After all, the NASDAQ 100 has been extraordinarily bullish, and of course there are the same stocks out there that people continue to buy.
- Passive investing uses a lot of index weighted properties, and of course the index itself in most markets is not equal weighted.
In other words, this brings in the same 7 stocks every day, and therefore people will buy them time and time again. It becomes a bit of a self-fulfilling prophecy and a bit of a feedback loop. Ultimately, the market would continue to reflect the fact that it is just a handful of stocks that everybody wants to own, and therefore the biggest movers of this market will continue to push higher. With this, I like the idea of buying dips along the way, but quite frankly you may not even have to wait for that if you are willing to hold your nose and simply hang on to the volatility.
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Even if you told me that the NASDAQ 100 was going to start falling apart tomorrow, I would have no interest in trying to short it, because there is so much momentum underneath. The market has been extraordinarily bullish for some time, and I think that continues to be what we see heading into 2024. After all, traders still expect the Federal Reserve to come out and loosen monetary policy, and that helps a lot of these riskier stocks, especially technology stocks. That’s the lifeblood of the NASDAQ 100 so I don’t see any reason why the behavior changes anytime soon. With this, I am a believer that the NASDAQ 100 is likely to reach the 18,000 level over the next several months.
The 20 day EMA underneath should offer plenty of support, currently sitting at 16,600 or so. Any move toward that area will certainly attract a lot of value hunting, and I think at that point people would get rather aggressive.
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