The Nasdaq composite (NASDAQ: .IXIC) is ticking ever closer to 5,000, a level it has not breached since the heady days of March 2000. But it may have to take a breather before it gets there, according to Chicago-based trader Jim Iuorio of TJM Institutional Services.
“Many times we make a run for these big, huge goal posts in the distance, and the market gets tired at or around these levels-and I think that’s what’s going to happen now,” Iuorio said Thursday on CNBC’s ” Futures Now .”
Still, Iuorio discounts the argument that flashbacks of the dot-com bubble are making traders reticent.
After all, it’s taken an awfully long time for the Nasdaq to get back to those levels-a very different pace than was seen at the end of the 20th century. And today’s rally is being led not by speculative names, but by stocks with grounded valuations like Apple (NASDAQ: AAPL).
Compared to back then, “everything is different,” not least the value of the dollar (in which the Nasdaq value is given).
But that’s not to say that markets don’t tend to wobble a bit at the sight of psychologically important, widely watched levels like Nasdaq 5,000.
“Whenever you are looking at those all-time highs, it becomes a big deal, and markets can get tired when they go after that.”
For active traders, then, Iuorio recommends going short the Nasdaq and playing for a quick dip (though he remains long-term bullish).
Needless to say, not everyone agrees with his trading thesis.
“Some aggressive traders might use 5,000 like a magnet to sell against, but it doesn’t have much significance outside of just being a nice round number,” said Mark Newton, chief technical analyst with Greywolf Execution Partners.
However, Newton is on board with Iuorio’s short-term bearish take.
“The Nasdaq composite has risen the last 16 of 18 days, momentum is overbought, and we’re within three to four days of triggering signs of exhaustion,” he told CNBC. “That means this move will likely need to be consolidated at some point before it can move higher.”
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