The Nasdaq 100 Index (CME: NQ) remains on an impressive streak, eyeing its ninth straight week of gains and an outstanding yearly return of 53.83%, leaving the index on course for its best year since the dot-com era, fuelled by a surge in tech stocks amid artificial intelligence (AI) exuberance and a dovish Fed stance.
The Fed’s anticipated rate cuts in early 2024 continue to buoy the market sentiment, particularly in technology stocks driven by the artificial intelligence surge. While mixed economic data poses dovish elements for the Fed, energy stocks suffered from a decline in crude prices.
However, with a potential soft landing on the horizon and much of the earnings growth already priced in, questions linger about the sustainability of this tech-driven rally.
Technical
The 4-hour chart shows that the Nasdaq 100, trading around 17,109.50, found support at the 20-SMA after breaking below a rising wedge pattern. Currently above the 20-SMA (green line), 50-SMA (blue line), and 100-SMA (orange line), the index shows a slightly higher RSI of 59.23, indicating bullish momentum.
Short-term trading opportunities could exist towards the 17,165.25 resistance level should the upward trajectory be sustained, with a push above the 17,165.25 resistance level likely to open the door to 17,244.75, with further strength targeting the recent all-time highs. However, exhaustion of the current upward move could lead to a pullback towards 17,043.50, with a break below that level potentially targeting 16,962.50.
Summary:
The Nasdaq 100 Index remains in a bullish posture as the year draws to a close. However, it’s worth monitoring potential profit-taking and a possible shift in market sentiment as the new year approaches. While the AI frenzy and expectations of Fed easing are providing support, opportunities lower could exist should key moving averages give way.
Sources: TradingView, Trading Economics, Reuters, Dow Jones Newswire.
Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst
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