- The NASDAQ 100 showed signs of recovery during Wednesday's early trading, as it continued to bounce back from the shock triggered by the CPI data released on Tuesday.
- Amidst this recovery, the market maintains its characteristic stance as a "buy in the dips" environment.
- I don’t see how this will change anytime soon, so keep that in mind overall.
Analyzing the NASDAQ 100, one can observe considerable volatility over recent days. However, amidst this volatility, the 20-day Exponential Moving Average appears to provide some support, alongside the key levels of 17,500 and 16,950, where significant support zones converge with the 50-day EMA. Given these factors, the prevailing strategy remains one of opportunistic buying during market downturns, albeit with caution due to existing overextension, which may contribute to increased volatility.
Nevertheless, the overall trajectory points towards a potential retest of the 18,000 level and beyond in the foreseeable future. This bullish sentiment is underpinned by the expectation that global central banks will continue to implement rate cuts throughout 2024. The prominence of the "magnificent seven" stocks, which traditionally drive the NASDAQ 100, further reinforces this upward momentum.
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Pullback Would Be Nice….
Despite the need for a significant pullback in the market, such a correction appears unlikely in the short term. Notably, even after the initial sell-off following the hot CPI print on Tuesday, the market swiftly recovered most of its losses. This resilience underscores the underlying strength of the market, which continues to attract investment inflows, particularly into passive investing strategies. Consequently, the same high-performing stocks within the NASDAQ 100 are poised to experience continued buying pressure.
At the end of the day, the NASDAQ 100 demonstrates resilience as it rebounds from the recent CPI-induced shock. While volatility persists, the overarching strategy remains one of strategic buying during market downturns. The anticipation of further rate cuts by central banks and the allure of high-performing stocks continue to underpin the market's upward trajectory, fostering an environment conducive to further gains in the NASDAQ 100. Furthermore, remember it is only 7 stocks or so that will continue to drive where we go over the longer-term.
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