Nasdaq 100 & Dow Jones Worth Outlook:
Nasdaq 100 Suffers Breakdown as Dow Jones Treads Water – Inventory Market Forecast
The Nasdaq 100 and Dow Jones have continued decrease this week as rising Treasury yields give investors a reason to consider exposure elsewhere. That mentioned, the longer-term fairness outlook stays encouraging as inflationary pressures and rising yields are underpinned by expectations of a robust US financial system. Nonetheless, fairness weak spot might persist within the coming days as buyers ponder portfolio allocations amid the shifting market setting and the Nasdaq 100 seems exceedingly susceptible.
Nasdaq 100 to Dow Jones Ratio – Tough Progress to Worth Proxy
Chart created in TradingView
To make certain, the tech-heavy Nasdaq 100 is located on the extremes of the market’s danger curve which has left it uncovered as buyers look to reposition. It’s quite unsurprising, then, that the Nasdaq 100 has seen its losses outpace that of the S&P 500 and the Dow Jones. Steeper declines have additionally seen the technical panorama weaken, most notably with a break beneath the March 2020 trendline, which can permit for an extension decrease and a continuation of the shift from development to worth.
Nasdaq 100 Worth Chart: Each day Time Body (January 2020 – February 2021)
Final week we highlighted 13,315 as a possible line within the sand that might see losses speed up if pierced. Evidently, 13,315 fell briefly order and an extension decrease was delivered. The rising trendline had guided the Nasdaq 100 greater since March and a break beneath is a considerable blow to the index’s technical panorama. Staving off additional losses within the days forward might show essential for tech shares.
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To that finish, months of good points have created a plethora of subsequent help for bulls to work with. As current worth motion may counsel, the late January low close to 12,727 may present a modicum of help. The 12,500 space barely decrease nonetheless might function the following main zone earlier than giving solution to the 200 day transferring common close to 12,000.
Dow Jones Technical Forecast
In contrast to the Nasdaq 100, the Dow Jones has been in a position to tread water close to document ranges and create a collection of lengthy decrease wicks within the course of. Ought to turbulence proceed, the Dow can look to a serious confluence of help from 31,130 to 30,865. Critically, the Dow has maintained the trendline extending from March and trades above its 50-day transferring common.
Dow Jones Worth Chart: Each day Time Body (January 2020 – February 2021)
Suffice it to say, the rotation from high-flying know-how shares into extra cheap worth or industrial shares that has been unfolding as a consequence of shifts on the elemental facet of the market has created divergent photos within the technical panorama. With Treasury yields and inflation expectations on the rise and the opposing technical photos on the 2 main US indices, it will seem the rotation could also be set to proceed within the days forward.
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Weekly Stock Market Outlook
Merchants can look to strategy this dynamic by way of bullish publicity to the Dow Jones and simultaneous bearish publicity to the Nasdaq 100. Such positioning could be nicely suited if the development continues however will not be with out appreciable danger. Additional nonetheless, the percentages of revenue and loss are evenly balanced in buying and selling. Within the meantime, observe @PeterHanksFX on Twitter for updates and evaluation.
–Written by Peter Hanks, Strategist for DailyFX.com
Contact and observe Peter on Twitter @PeterHanksFX