2022/04/21 (030) Technical Analysis – NDX

The Nasdaq 100 fell 1.97 percent.
The new level for the index: 13,723 points.
The bulls are getting currently rather pessimistic!


Nasdaq 100: That was really ugly when you’re long here

Thursday was the day of central banker statements. And all sounded like a tightening of the course. Higher interest rates even faster is poison, especially for high-tech stocks. The Nasdaq 100 reacted accordingly… and that may have set the tone lower.Beginning in the afternoon of our time, testimonies came from Jerome Powell and Christine Lagarde, both of whom took part in a panel discussion at an IMF and World Bank meeting. While US Federal Reserve Chairman Powell hinted that the big 0.5 percent steps will be taken immediately, Ms. Lagarde’s statements sounded as if the first interest rate hike in the euro zone could take place as early as July. In addition, statements by the governor of the Bank of England Bailey, the US central bankers Daly and Bullard and ECB Vice President De Guindos also pointed in the direction of a tightening of the course.

This barrage of “hawkish” statements is likely to have contributed to the fact that the US technology index Nasdaq 100 started out well in the black and thus completely equalized the previous day’s losses, but then quietly drifted into the red. First, most high-tech companies whose shares are listed on the Nasdaq 100 have a higher need for debt financing, which would become significantly more expensive with higher interest rates. Second, it’s the crowd-pleasers among the high-tech stocks listed on the Nasdaq 100 in which many traders in the derivatives market are speculating heavily on bullish speculation… often on credit, which would become less attractive with higher interest rates.

It is therefore not surprising that the Nasdaq 100 has been under significantly more pressure over the course of the year than the Dow Jones, which is made up of mostly more conservative companies. And with this multiple strike by central bankers willing to act, the bullish camp could now get even more into trouble.

The top stocks in the Nasdaq 100

Among the stocks in the index, stocks from Tesla, CSX and Monster Beverage stand out positively. Tesla’s share price has risen the most. It gained 2.70 percent in value compared to the last recorded price of the previous trading day. The stock is currently priced at $1,003.61. The CSX paper also recently increased in price. Investors are currently paying 2.61 percent more for the security than at the close of trading the previous day. CSX stock is priced at $36.22. Monster Beverage was also listed more firmly with a price increase of 2.06 percent. The paper was last listed at a price of 87.11 US dollars.

These titles are going downhill

Match Group, Align Technology and Pinduoduo are currently the deepest in the red. The Match Group security brings up the rear. Match Group stock is trading at $77.44 on the hour. Compared to the closing price of the previous day, this corresponds to a loss of 8.48 percent. The price for the paper from Align Technology also fell. Discount compared to the last price of the previous day: 8.38 percent. Align Technology shares are currently priced at $384.04. Also worth mentioning is Pinduoduo, which is down 7.45 percent and currently ranks third from bottom on the Nasdaq 100 list. The paper was last listed at $34.53.

The Nasdaq 100 has also had negative results since the beginning of the year

The stock market barometer has lost 16.44 percent in value since the beginning of January. The Nasdaq 100 is the stock market index of the New York Stock Exchange Nasdaq. Technology and growth stocks are traded on it, mainly from the USA, but also from other countries. The index includes the 100 largest stocks on the Nasdaq. The size is measured by the market capitalization. However, the strict index guidelines exclude stocks from the financial sector from being included. The index level is calculated exclusively on the basis of share prices without taking into account dividend payments (price index).

A short technical analysis

You can see on the daily chart that the Nasdaq 100 basically has a chance to form an inverted two-headed head-and-shoulders pattern, cementing a reversal to the upside. The left shoulder was created at the end of January, the two heads at the end of February and mid-March. Now we have a right shoulder and a chance to break up from here and above the 15,280 neckline. Had the Nasdaq 100 made it above the 14385/14455 resistance zone and the 20-day moving average just above it, an attack on the neckline would have been likely. But now this scenario is tipping over.

With Thursday’s intraday turnaround lower, the Nasdaq 100 has slipped back to January’s lowest left shoulder level (13,725 points). This is like a kick in the back of the knee for the bullish camp. If the index continues to slide, the low for the year so far at 13,020 points can be reached very quickly.

Then it would depend on how the balance sheets of the remaining heavyweights such as Alphabet, Apple, Meta Platforms or amazon.com are recorded. But after Netflix was literally melted down after its numbers and the Tesla numbers didn’t trigger any too dynamic buying, it may well be that the confidence that has now faltered massively will tempt traders to sell if in doubt, even if there is just a hair in these outstanding balance sheets should swim in the soup.

And if that were the case, this low for the year could also break in view of the certainty that interest rates will be significantly higher in the near future. Then the next notable recovery zone would only be in the region of 12,200/12,400 points, as we can see in the chart on a weekly basis. So yesterday was not a good day at all for traders – at least for those hanging out on the long side here.