Almost all of this is going to come down to the Federal Reserve and whether or not they will back up.
The NASDAQ 100 rallied during March, breaking above the 15,000 level again. That is a large, round, psychologically significant figure, so it is worth noting. That being said, the NASDAQ 100 looks as if it is trying to recover fully, but this is going to come down to the Federal Reserve more than anything else.
Bond markets are expecting an extraordinarily high yield going forward, and some indications are that bond traders are anticipating as many as eight interest rate hikes. The Federal Reserve will get nowhere near there unless inflation gets completely out of control. If it does in fact get completely out of control, then the Federal Reserve will get aggressive with its tightening cycle, which will have a bit of a knock-on effect on stock markets in general.
Keep in mind that the NASDAQ 100 is highly sensitive to risk appetite, as well as interest rates. If interest rates do in fact continue to climb, that will work against the value of the NASDAQ 100. The markets continue to move on just a handful of names, and that will always be the case. The NASDAQ 100 is a market cap-weighted type of index, meaning that Tesla, Microsoft, Alphabet, and a handful of others are what move everything.
At this juncture, it looks as if we are trying to recover completely, but if we were to break down below the 50-week EMA at the 14,530 level, then it is likely that the market could break down to reach the 13,000 level again. This would obviously fall in line with other indices, such as the S&P 500. The market will continue to be very noisy, but one can say that we are still in the midst of a “bear market bounce” that could get sold into. However, if we clear the 15,250 level, it is likely that the market will continue to go higher.
Almost all of this is going to come down to the Federal Reserve and whether or not they will back up. History suggests that they very well could, but until then there will always be a little bit of hesitation. At this point, the traders on Wall Street seems to believe that the Federal Reserve will come riding to their rescue yet again.