NASDAQ 100 and SP 500 Forecast (30 Jan 2024)

NASDAQ 100 Forecast: NASDAQ 100 Continues to Look for Reasons to Go Higher

NASDAQ 100 Rally with Potential Pullback - Early gains face fatigue ahead of Fed meeting. Market looks for buying opportunities near 16,950.

• The NASDAQ 100 experienced an early rally on Monday, as has been the norm.
• However, questions arise about whether signs of fatigue are emerging ahead of the Federal Reserve meeting scheduled for Wednesday.

The NASDAQ 100's early surge on Monday is noteworthy, but there are notable factors to consider just above its current levels. Last week, on both Thursday and Friday, a shooting star pattern was formed, indicating a potential overextension in the market. In this context, a pullback appears to be a more sensible expectation, with the 20-day Exponential Moving Average and the 16,950 level below serving as potential points for buying opportunities. It's important to note that there have been instances in the past where pullbacks seemed likely, but the market defied expectations. Consequently, the prudent approach in this scenario is to consider buying on dips and refrain from shorting the market.

Underneath…

Even if the market were to decline to the 17,000 level, it would not warrant selling the NASDAQ 100. This index operates in its own unique realm. Looking ahead, Wednesday holds the Federal Open Market Committee (FOMC) meeting and, perhaps more crucially, a press conference following the decision. This event is expected to exert a substantial influence on trading activity leading up to it, as market participants are likely to avoid overexposure due to potential volatility. The meeting's outcome will offer clarity and guide Wall Street's appetite for risk, possibly prompting either an increase in risk-taking or a surge in panic.

A modest drift coupled with a slight pullback seems to be the most plausible scenario. However, it's important to watch for a potential breakthrough above the levels marked by the two shooting stars, as that would signal a robust bullish trend. The NASDAQ 100's performance is largely driven by a select group of companies. Consequently, investors should closely monitor the usual suspects—these companies are like the cornerstone holdings in an ETF that comprises seven major stocks along with 93 others that sometimes catch investors' attention.

At the end of the day, the NASDAQ 100's recent price action hints at the possibility of a pullback. The market's response to the upcoming FOMC meeting and press conference will likely determine its near-term direction. Despite potential volatility, it remains prudent to consider buying opportunities on dips rather than shorting the market, given the NASDAQ 100's unique dynamics and the dominance of a handful of key stocks.

SP 500 Forecast: SP 500 Continues to Rise Overall

The 5,000 level above is a large round figure that a lot of people should go looking toward. But really at this point, I think that is such a huge barrier that it probably causes a significant amount of trouble. Anything above 5,000, of course, will capture a lot of attention.

• The S&P 500 rallied early during the trading session on Monday, as we continue to see an overall upward trajectory drive the market.
• That being said, this is a market that is probably a little overextended at the moment, therefore we need to be very cautious about getting too overly aggressive to the upside.

The 4900 level, of course, is an area that has caused issues, but short-term pullbacks I think could end up being nice buying opportunities. The 4800 level underneath is an area that I would anticipate being support because it had been previous resistance, and a certain amount of market memory should come into the picture. If we break down below the 4800 level, then we go looking to the 50-day EMA that sits right at the 4700 level. This is an area that I think is going to be crucial.

Buy the Dips

All things being equal, this is buy on the dips, and the S&P 500 will continue to pay close attention to the idea of liquidity and what the Federal Reserve is doing. For example, if the Federal Reserve is going to loosen monetary policy, then it makes sense that the S&P 500 goes higher. What will be interesting is that on Wednesday, we have the Federal Open Market Committee giving out the interest rate decision, and a press conference afterwards that will have a lot to do with what Wall Street expects to happen. The 5,000 level above is a large round figure that a lot of people should go looking toward. But really at this point, I think that is such a huge barrier that it probably causes a significant amount of trouble. Anything above 5,000, of course, will capture a lot of attention.

As things stand right now, I think this is just simply a buy on the dip type of scenario, but between now and the end of the day on Wednesday, it might be somewhat quiet as we wait to see what Jerome Powell will have to say about the future of interest rates in the United States. Pay close attention to the way the market behaves at the end of the day on Wednesday, it could give us a bit of a “heads up” as where we are heading over the longer-term.

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