Tech bulls - watch out! #NAS100 #NASDAQ
At the time of writing the Nasdaq100 index is lower by just over 3%. The composite is coming under sever pressure as a surge in bond yields are spooking investors, prompting them to dump risk assets, especially those in the high-flying technology names.
Looking at the Weekly Nas100 index from a technical perspective, i see 3 technical factors which are warning of a bigger correction to come in the Nasdaq. (1) We have seen 3 new highs in price which are not being confirmed by the RSI (bearish divergence), a sign of momentum slowing which could be warning of a further correction that could unfold in this tech-heavy sector in weeks to come. (2) The MACD is also confirming potential weakness with negative divergence evident in the indicator. (3) Also note that the weekly chart is now also trading below the uptrend (UT) support which has been in place since the March 20 covid lows, further giving us a clue that the steepness of this UT is unsustainable & further exposing weakness in the structure of this chart.
Keep a close eye on the horizontal support level between the 12700 - 12760 area, as a failure and weekly close below this zone could confirm the breakdown, likely leading price to target the lower support levels at 12000 and then 11000. Is is quite evident by looking at this chart that the level of 11000 was a critical support level in 2020 & most predominantly, it is also the yearly Pivot level for 2021. This would be a logical level for the market to find support should we retreat that far.
As vaccines are rolled out and economies reopen, perhaps 2021 could be the year that the tech rally stalls as investors reposition and rotate into the value sector "reopening stocks"..
Good luck!
Looking at the Weekly Nas100 index from a technical perspective, i see 3 technical factors which are warning of a bigger correction to come in the Nasdaq. (1) We have seen 3 new highs in price which are not being confirmed by the RSI (bearish divergence), a sign of momentum slowing which could be warning of a further correction that could unfold in this tech-heavy sector in weeks to come. (2) The MACD is also confirming potential weakness with negative divergence evident in the indicator. (3) Also note that the weekly chart is now also trading below the uptrend (UT) support which has been in place since the March 20 covid lows, further giving us a clue that the steepness of this UT is unsustainable & further exposing weakness in the structure of this chart.
Keep a close eye on the horizontal support level between the 12700 - 12760 area, as a failure and weekly close below this zone could confirm the breakdown, likely leading price to target the lower support levels at 12000 and then 11000. Is is quite evident by looking at this chart that the level of 11000 was a critical support level in 2020 & most predominantly, it is also the yearly Pivot level for 2021. This would be a logical level for the market to find support should we retreat that far.
As vaccines are rolled out and economies reopen, perhaps 2021 could be the year that the tech rally stalls as investors reposition and rotate into the value sector "reopening stocks"..
Good luck!
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