Did the Nasdaq 100 Just Enter Bear Mode?!

By Bennett Tindle January 14, 2022

Greeting’s traders and investors, and welcome back for a brief market update! Bennett here, coming to you after nearly two months of sideways trading action in the Nasdaq 100. Many are now wondering if the growth trade is over, and if the rotation into value will remain dominant for 2022. While I would never myself be void of exposure to growth names and sectors, I do feel 2022 will look significantly different than the years preceding it. Although the NDX did manage to rally back to just shy of its all time high by years end, volatility set in last Wednesday January 5^th following the release of the December FOMC meeting minutes.

The minutes release is typically a non-event, and generally echoes the sentiment communicated in the actual meeting statement and press conference… This time was slightly different, and there were a few surprises in the minutes that caught investors off guard. First, the fed is now penciling in three quarter-point hikes in the federal funds rate for 2022, three more in 2023 and one more in 2024. Additionally, most committee members agree balance sheet runoff will be needed following the first hike. So, perhaps a 1-2-3 punch that investors weren’t anticipating. And while markets do price things in well in advance, the pace of normalization is still, in the words of the Fed, heavily dependent upon the pace of economic recovery.

So where do we go from here? If you’ve been following my work, you know I’ve been highlighting the possibility of (from a technical perspective) a larger 10-20% market correction sometime this year. But is that correction upon us now, or do we have further work to do on the upside first? Tune in as I take you through the charts, highlighting why I still think we see a new high in the Nasdaq 100 before that move sets in.

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