The NASDAQ 100 continues to fall quite significantly during the Thursday session, as we see technology stocks get absolutely hammered. The latest one is Meta, or what most people still call Facebook, which at one point in the overnight session was down about 20%. As Zuckerberg continues to harp on about the metaverse, the rest of the world doesn’t seem to be that interested.
Furthermore, you have the debacle that is Elon Musk taking over Twitter, which who knows what that will bring? In other words, technology is a mess under the best of circumstances, and now you have a tightening monetary policy that almost certainly will add more pain to this area of the financial world. Keep in mind that technology stocks like low-interest rates, mainly because most of the “financial darlings” in this sector are even profitable, and they need some type of funding or easy monetary conditions to continue to attract venture capital.
NASDAQ 100 Likely to Lose Ground
- When the interest rates tighten up out there, it makes the idea of getting venture capital funding very difficult, which means that a lot of these companies would actually have to earn a profit.
- While some of the bigger ones are well, the reality is that Google and Facebook have to worry about the fact that fewer people are spending money on advertisements, which is a very bad sign for the economy.
- With that being the case, and the fact that it has been so brutally one way most of the session, anticipate that the NASDAQ 100 could go back down to the 11,000 level and the next day or 2.
Next week, we get the FOMC announcement, and it’s widely anticipated that the Federal Reserve should raise interest rates by 75 basis points. There are some on Wall Street that think that they are only going to do 50, but that’s a bit of an outlier and the Federal Reserve has done nothing to make people believe that. As long as people are still out there trying to figure out what they want to do with themselves, there will be volatility. However, this is a market that I think has been in a nasty downtrend, and while this most recent rally has been impressive, is nothing but a bear market rally and those get sold into by those who are patient enough to wait for the opportunity.
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