2022/04/24 (031) Technical Analysis – NDX

Microsoft, Apple, Facebook & Co. in focus this week
Good news doesn’t help – difficult investment environment
Still basically bearish when it comes to the NASDAQ 100 Index!


Difficult investment environment
The recent slide in global stock markets was triggered by a clear statement by Fed Chair Jerome Powell on Thursday that a rate hike of 50 basis points is expected after the bank’s next interest rate meeting on May 4th. Although there had been speculation on the markets for a further US interest rate hike for some time, investors are now reacting surprisingly clearly to the concrete announcement. Since then, prices in both Europe and the USA have been falling – on the as well as in the bond market. Above all, investors fear that the US Federal Reserve could stifle the economy with its interest rate. Speaking of the economy: further economic fears are currently coming from China, where the corona pandemic is spreading. It also fuels fears over China’s economic growth. “The new story today is China and the market is very concerned about the impact on supply chains,” said Roland Kaloyan, equity strategist at Societe Generale. After dozens of corona cases in China’s capital Beijing, there is growing fear of a lockdown like in the economic metropolis of Shanghai.

Good news doesn’t help

Concerns dominated – despite the relief at the election victory of French President Emmanuel Macron. Even a surprisingly robust ifo business climate index does not help. “But business expectations in industry in particular are still at levels where recessions had occurred in the past – such as in 1992/93 after the reunification boom, in 2008 during the financial market crisis or in spring 2020 after the outbreak of the corona pandemic “, emphasizes Commerzbank chief economist Jörg Krämer. Other experts were also critical, saying there was no reason to give the all-clear.

Microsoft, Apple & Co. in focus

However, how the prices could develop in the coming days also depends on the further course of the US reporting season. Over the course of the week, quarterly figures from US tech giants Microsoft, Alphabet, Meta, Apple and Amazon are likely to be viewed particularly critically by investors.
Tech stocks have always led the stock market rally in recent years. A weak signal from this sector would have fatal consequences for the market as a whole. In the previous week, Netflix had already caused a bitter disappointment with its quarterly figures.

The dollar keeps getting stronger

More and more investors are looking for salvation in the “safe haven” of the world’s leading currency, the US dollar. The dollar index, which tracks rates against major currencies, rose 0.3 percent to a two-year high of 101.34 points. The expected series of US interest rate hikes and fears of a recession are currently also the dominant themes on the foreign exchange market, says Candace Browning, chief analyst at Bank of America. Meanwhile, the euro benefited only briefly from Macron’s victory in the French presidential election. The forthcoming US interest rate hikes quickly moved back into the focus of currency market investors. The euro continues to fall and is only just above the $1.07 mark in US trading in the evening. The ECB set the reference rate at 1.0746 (Friday: 1.0817) dollars.

Basicly Technical Analysis about the NASDAQ 100

The Nasdaq 100 initially held its ground above the support at almost 13900 in the past week, on Thursday the quite energetic downward breakthrough followed. That led to another drop on Friday and an overall weekly decline of 536 points, or 3.6 percent.The index is now heading for the low for the year at 13,020 points. Looking at the mid-week chart, a drop to the support at 12400 also seems plausible. Then it remains to be seen whether the Nasdaq 100 can form a bottom at this level. Otherwise, i.e. if the 12400 breaks down, another strong downward movement can be expected. A new medium-term buy signal has moved into the distance for the time being. The charts clearly shows how the quotation repeatedly approached the support at almost 13900 for days before the breakthrough took place. The Nasdaq 100 thus provided a short-term sell signal. Two indicators, the MACD and the stochastics, are also currently pointing downwards. If the weak support in the form of the annual low at 13020 does not hold, there is a risk of a noticeable downward thrust. The chart technology for US technology stocks is currently pointing downwards, so investors should be prepared for falling prices. The first price target is the annual low of 13020 marked in March. If the index also falls well below this mark, the next price target is the support at 12400 on the agenda.

My own personaly subjectivly individuel following applies to all bulls!

The NASDAQ 100 posted its lows for the year more or less during Russia’s attack on Ukraine. In this context, it may also be interesting to note that now that more and more FED central bank members are in favor of a faster and higher interest rate hike, the NASDAQ 100 is again trading more or less around its previous low for the year. So we assume that the NASDAQ 100 bulls currently have the courage to buy at these prices in the medium term, and/or also in the long term, since the US yield curve, which is certainly subject to interest, is becoming more expensive at the same time. Therefore, the wheat is separated from the chaff: overvalued stocks that have not (yet) guaranteed any profits for decades, such as Netflix, Tesla, Twitter, are becoming more volatile and expensive/cheaper, in contrast to APPLE and/or MSFT, for example.

Nevertheless, I cannot and do not want to judge whether the FED is now raising interest rates faster and higher than originally thought – 25 basis points at each upcoming regular central bank meeting in 22. Let alone I don’t want to and I can’t do that To judge the catastrophic war in Ukraine, which is not only an economic disaster. Rather, it also resulted in millions of people fleeing. Let alone cost numerous lives. And this despite the fact that our so-called West, in our media, wants to sell us a victory for the West! What victory? For what price? And that`s why although most companies have nothing to do with the Ukraine war and have even been profit machines for decades, I am currently tending to be rather pessimistic about the NASDAQ 100…