The Nasdaq 100 fell to open the week, as the risk appetite of traders was crushed by the headlines coming out of the Middle East.
NASDAQ 100
The Nasdaq 100 fell pretty significantly early as we have seen a lot of questions about peace in the Middle East and that of course is a major problem. With this being the case, I think you have to look at this as a potential buy on the dip market, but with the headlines we have no real idea as to where things may or may not be going over the next couple of days.
So, the most important thing you can do is try to keep your position size reasonable. That being said, I do believe that the 26,275 level could end up being a bit of a floor on pullbacks as long as we continue to see at least some resilience in this market. It got here really quickly so I would be very cautious about getting aggressive.
Technical Support and Market Consolidation
I think ultimately 1 of 2 things needs to happen. We either pull back a bit deeper than that support level or we go sideways for a while and work off some of the excess froth that had been building up. If we were to break down below the crucial 26,275 level, then I think it could open up a move all the way down to the 25,600 level.
I don't necessarily think that is likely to be the case, but it is a very real possibility. So, with that being said, I think we have a situation where eventually we make fresh highs, but it may take some type of good news coming out of the Middle East to make that end up being the case. The grinding sideways of the market for me is probably the healthiest thing that we can see, but keep in mind this is also a very nervous time we're living in.