The Nasdaq 100 index, a basket of 100 of the largest non-financial stocks on the Nasdaq Stock Exchange, has been one of the best-performing indices in the United States in 2020. Over the past couple of months, the Nasdaq 100 has gained almost 20%, reaching record highs as investors continue to flock to technology and high-growth stocks.
However, recent events have put a damper on this remarkable run-up. The recent announcement of large stimulus bills, additional COVID relief measures, and the reopening of the US economy has shifted investor focus towards more cyclical stocks that are likely to benefit the most from the economic recovery. This shift in investor sentiment has caused the Nasdaq 100 to pull back in the short-term, with many investors expecting further declines in the near future.
There are also a number of technical indicators that suggest a near-term pullback for the Nasdaq 100. On the technical side, the index has recently closed near its declining 20-day moving average and is trading below the 200-day moving average for the first time since October. Although this could be viewed as a sign of bearishness, these technical indicators should be viewed in context with the fundamental backdrop.
Fundamentally, the Nasdaq 100 has been supported by strong corporate earnings, positive sentiment towards tech stocks, and a low-interest rate environment. However, as investors begin to focus on more cyclical sectors, many of the technology stocks in the index could come under pressure in the short-term. In addition, the high valuations of many of the companies in the index could cause a pullback in the near-term if investor sentiment weakens.
Overall, there are a number of indicators that point to a near-term pullback in the Nasdaq 100 index. Therefore, investors should exercise caution and monitor the index closely in order to make sure they don’t miss out on potential profits in the future. With that being said, investors should keep in mind that the Nasdaq 100 has been one of the best-performing indices and could continue to benefit from a sustained economic recovery.
The Nasdaq 100 index, a basket of 100 of the largest non-financial stocks on the Nasdaq Stock Exchange, has been one of the best-performing indices in the United States in 2020. Over the past couple of months, the Nasdaq 100 has gained almost 20%, reaching record highs as investors continue to flock to technology and high-growth stocks.
However, recent events have put a damper on this remarkable run-up. The recent announcement of large stimulus bills, additional COVID relief measures, and the reopening of the US economy has shifted investor focus towards more cyclical stocks that are likely to benefit the most from the economic recovery. This shift in investor sentiment has caused the Nasdaq 100 to pull back in the short-term, with many investors expecting further declines in the near future.
There are also a number of technical indicators that suggest a near-term pullback for the Nasdaq 100. On the technical side, the index has recently closed near its declining 20-day moving average and is trading below the 200-day moving average for the first time since October. Although this could be viewed as a sign of bearishness, these technical indicators should be viewed in context with the fundamental backdrop.
Fundamentally, the Nasdaq 100 has been supported by strong corporate earnings, positive sentiment towards tech stocks, and a low-interest rate environment. However, as investors begin to focus on more cyclical sectors, many of the technology stocks in the index could come under pressure in the short-term. In addition, the high valuations of many of the companies in the index could cause a pullback in the near-term if investor sentiment weakens.
Overall, there are a number of indicators that point to a near-term pullback in the Nasdaq 100 index. Therefore, investors should exercise caution and monitor the index closely in order to make sure they don’t miss out on potential profits in the future. With that being said, investors should keep in mind that the Nasdaq 100 has been one of the best-performing indices and could continue to benefit from a sustained economic recovery.
