A steep decline in the Nasdaq 100 cash market yesterday and finish near 29,347.00 has been met with only a sliver of buying thus far in early futures trading as investors appear nervous.
The Nasdaq 100 futures trading at this moment is near 29,358.00, which is a slight gain compared to yesterday’s finish on the cash market which produced a resounding decline of nearly -3.29%. It appears after the flirtation and achievement with apex highs, the Nasdaq 100 has moved back to earth leaving ‘space’ behind. The trajectory which was helped by the approaching IPO of SpaceX and its conclusion the past few weeks and into last week has now seen rockets silenced.
Behavioral sentiment has turned lackluster. Whether it is a general mood regarding valuations which were seen as too high among investors, there is no question the Nasdaq 100 has taken on a darker – more troubled tone. Day traders need to beware that the velocity of moves in the Nasdaq 100 are fast and given the fact that most people tend to be buyers - because even traders are largely positive people, the Nasdaq 100 might not deliver reversals upwards as wanted during the time periods needed.
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Risk Management and Looking for Trends
The strong selling which has developed in the Nasdaq 100 since Monday when the 30,600+ level was challenged has turned noise into fear. And while day traders may be tempted to step in and look for a reversal that is likely to develop – the question regarding when the reversal upwards is going to develop is problematic to answer. Once again financial houses seem to have become nervous as chatter has increased again about companies involved in Artificial Intelligence and their likelihood of having to face increased headwinds via competition.
Yes, the Nasdaq 100 has done this before in recent months. The Nasdaq 100 has suffered steep selling and then found a crowd of buyers who have taken the index to new heights. Perhaps another scenario of fast losses will turn into quick profits again. However, speculators need to manage their risk taking tactics with open eyes.
The Test of Short and Mid-Term Outlooks
We can blame the sell off of the Nasdaq 100 on profit taking, but we also have to consider the fact that stock – equities – do not always rise when wanted because sentiment remains king.
Timeframes are important in speculating because day traders often do not have enough money to withstand the market going against their chosen direction.
The Nasdaq 100 around the 29,350.00 level may look cheap, but let’s remember only a couple of weeks ago the index was touching the 28,200.00 mark after emotions and fear caused a sea of selling.
Buying will erupt again on the Nasdaq 100, but day to day affairs may remain choppy and violent near-term.
Nasdaq 100 Short-Term Outlook:
Current Resistance: 29,420.00
Current Support: 29,330.00
High Target: 29,650.00
Low Target: 29,010.00
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