The Nasdaq-100 has been dead in the water since a frenzy of bullishness in early-September, but now it could be coming back to life.
The first reason is last week’s break of the downward-sloping trendline we observed on November 18.
Second, NDX is pushing again the bearish outside day on November 9. That reversal pattern offered resistance for a while, but now the index is trying to break the top of that candle.
Third, prices are finding support above some important moving averages. NDX bounced at the 50-day simple MA (SMA) on November 10. Last week it held at both the 8- and 21-day exponential moving averages (EMAs).
Finally, broader conditions could be more favorable. Apple jumped today on hopes of a strong iPhone cycle. There’s also been some M&A lately, biotechnology stocks are advancing and new tech IPOs are coming. Meanwhile, the “reopening” trade may have run its course for now – especially because Covid cases are still rising. Oil is also falling again as OPEC struggles to contain supply and the Fed is talking about pushing down long-term interest rates. (See last week’s Minutes.)
All of that could make sentiment shift back toward the growth / technology theme that’s led in 2020. And that would be a positive for the Nasdaq-100.
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