- The Nasdaq 100 is consolidating near a key psychological level after a strong rally, with volatility driven by artificial intelligence narratives.
- Despite short-term uncertainty, the broader uptrend remains intact, and pullbacks are viewed as buying opportunities.
The Nasdaq 100 fell during trading on Tuesday, but it does look like we are at least trying to stabilize around the 25,000 level. The 25,000 level of the course is a large, round, psychologically significant figure and an area that we've seen a lot of action at. So I think it's probably only a matter of time before we see the bounce that could perhaps send this market higher. If we can break above the highs from the Monday session, I think that would be a really good sign that we are going to try to get to where we dumped on Friday, possibly even as high as the 26,000 level.
Artificial Intelligence Volatility and Consolidation
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Keep in mind that the NASDAQ 100 is being whipped around by the latest drama and rumors about artificial intelligence. This is a story that's as old as Wall Street, where people push a narrative, push the market straight up in the air, and then start to dump it off. They say something like, “Here, hold my bags.” AI stocks plummet, which brings the index down, and then we rally. That, at least, is the fear.
Right now, it is still just a simple consolidation after a big move to the upside, where we gained roughly 30-ish percent, pretty straightforward and without much in the way of a give-back. So now we're in the process of trying to stabilize and sort out whether or not markets can go higher. Here's the hint: they will. And that's because the NASDAQ 100 is not an equally weighted index.
That's why you've heard me more than once on Daily Forex tell you, I don't short this thing. That doesn't mean it can't fall. Obviously, it can fall, but it only takes a handful of stocks for everybody to go running right back to them, and then the whole thing turns around. So the question for me isn't so much whether or not I should be short of this market. It's more like “Where am I buying it?”
Again, if we can break above the highs of the Monday session, I think that's a decent enough place. But if we fall from here, I'll be looking at $24,000. Maybe I can get it really cheap. Nonetheless, the uptrend is still very much intact.
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