US stocks fell sharply again. How to grasp the short selling opportunity under the background of the Nasdaq 100 bear market?

After the US inflation data recorded a better than expected performance, the SP500, the Nasdaq 100 and the Dow Jones index fell as much; The rise in price pressure may boost the Fed's interest rate hike by taking the lead in raising interest rates; With the deterioration of market sentiment, it may be difficult for US stocks to rebound meaningfully in the short term.

Risk sentiment continued to deteriorate, and US stocks fell sharply again

On Wednesday, when the negative risks of the U.S. economy rose and Wall Street's risk appetite continued to decline, U.S. stocks fell sharply.

At the close of trading, SP500 fell 1.65% to line 3935, the lowest level since March 2021. The Dow Jones index fell 1.02% to 31834, setting a new low for the year. At the same time, while major technology giants such as apple, Microsoft and Amazon all fell freely, the Nasdaq 100 suffered a sharp sell-off, falling 3.06% to the line of 11967.

Although stock index futures rose significantly before trading, optimism turned 180 degrees after the unexpected negative impact of the consumer price index (CPI) in April.

Data showed that the annual growth rate of CPI in the United States slowed to 8.3% in April from 8.5% recorded in March, which is a sign of the slowdown of widespread price pressure, but it did not slow down significantly. The core CPI also recorded a performance that exceeded consensus expectations, with the annual rate slowing to 6.3% from 6.5% previously.

Although the direct improvement of overall and core indicators is the result that the market is happy to see, the data on Wednesday is a good reminder to investors that the Federal Reserve has a long way to go in restoring price stability.

Looking forward to the future, the base effect may help to promote the slowdown of year-on-year inflation growth, but the potential trend is still well maintained at the desired level. The Federal Reserve is likely to maintain the hawkish position and continue to adopt the pre interest rate increase at the next few meetings to quickly return the monetary policy to a neutral position.

On the whole, inflation is still hovering around a 40 year high, and we may not have reached the peak of the hawkish monetary policy outlook. In this context, it is expected that the yield of U.S. Treasury bonds will rise in the short term, which will trigger recession concerns and pressure investor sentiment.

Therefore, it is expected that risk appetite will remain weak, which will hinder us stocks from launching any significant recovery.

In fact, I expect that we will continue to witness the recent phenomenon of "sell the rip", that is, investors are worried that the stock market will be difficult to maintain the rise, thus diluting any rebound.

Technical analysis of Nasdaq 100 trend

After a major decline on Wednesday, the NASDAQ 00 fell below the important support of the 12210 line and fell to a new low of 11967 in 2022. As this technology index enters a bear market and is obviously biased downward, the next short seller's goal may be to look at the 11600 line.

If further weakness, the next bottom worth considering will focus on the 11000 line. On the contrary, if bargain hunting returns to the market and successfully pushes up the price, the initial resistance will focus on the 12210 line, and if it breaks, it will focus on the vicinity of 12645. If these levels are successfully broken through, the focus will turn to the 13000 level.