CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

Nasdaq 100 analysis: NDX surges to a 30% YTD gain – where next?

Article By: ,  Head of Market Research
May 26, 2023 5:33 PM

Nasdaq 100 takeaways

  • The Nasdaq 100 has now surged by more than 5% in less than two days after Nvidia’s stellar earnings in another sign of a potential AI bubble in the making.
  • Positive signs around a potential debt ceiling deal and resilience in the US economy are also supporting the index.
  • The next resistance level to watch is 14,355, the 61.8% Fibonacci retracement of the bear market

Nasdaq 100 fundamental analysis

Wednesday’s earnings from chipmaking giant Nvidia have provided a shot of adrenaline for risk appetite, and the Nasdaq 100 has been by far the biggest beneficiary.

At this point, it feels inevitable that “The Great AI Boom of 2023” will become “The Great AI Bubble of 2023,” if it hasn’t already, but that doesn’t mean that enthusiasm (and prices) can’t go much higher in the interim. As billionaire investor George Soros famously quipped, “When I see a bubble forming, I rush in to buy, adding fuel to the fire.”

It’s clear from this quarter’s earnings conference calls that many companies have the same idea:

Source: Bank of America

Of course, the risk with hopping on such an obvious trend is being the “greatest fool,” or the last one to buy right at the top, but with continued positivity around a potential debt ceiling deal and this morning’s Core PCE report showing a more resilient US economy than expected, there are other fundamental storylines supporting today’s rally in the Nasdaq 100.

Nasdaq 100 technical analysis – NDX daily chart

Since Nvidia’s earnings after the bell on Wednesday, the Nasdaq 100 has rallied by more than 5% in less than two days, bringing the year-to-date return for the tech-heavy index to more than 30%.

Looking at the chart, the situation is relatively clear: The Nasdaq 100 remains in a strong uptrend, though prices are undoubtedly overbought in the short term, raising the risk of a pullback next week. If the short-term rally continues, the next notable resistance level to watch is the 61.8% Fibonacci retracement of the recent bear market near 14,355, with room up to the Q1 2022 highs above 15,000 if bulls can clear that hurdle.

Source: Tradingview, StoneX

Meanwhile, more conservative traders may prefer to wait for a pullback toward 14,000 next week to join the uptrend at a potentially more favorable price. Only a confirmed close back below previous-resistance-turned-support at 13,700 would erase the near-term bullish bias.

-- Written by Matt Weller, Global Head of Research

Follow Matt on Twitter: @MWellerFX

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024