Fed a big test on Wednesday
It’s been a wild ride so far this year and there may still be plenty more to come.
The NAS100 has smashed through key support levels on an almost weekly basis and now sits around 15% off its highs, thanks to a remarkable rebound on Monday.
The index has trended lower once more today but remains above yesterday’s lows which could be a promising signal. Turnarounds like yesterday don’t happen very often and the power of the rebound could be viewed as an encouraging signal.
Of course, we are witnessing markets where fear is dominating and that could be ramped up over the next 48 hours depending on how the Fed and big tech earnings perform.
If the NAS100 continues to slide, the momentum indicators could offer insight into whether yesterday’s rebound has slowed the sell-off, with some major levels lurking below.
The 20% correction mark – which technically leaves the index in bear market territory – falls around 13,416 – so we could see support appear around here, perhaps even a little higher given the potential psychological impact around 13,500.
Below here, the 38.2% Fibonacci retracement level – which covers the pandemic lows to highs – falls around 13,000 which will make that a major test.
Whether we get that far is hard to say but what we’ve seen so far this week suggests there may be plenty more volatility to come.
