Nasdaq 100: Riding the Tech Wave

The Nasdaq 100, a home to 100 cutting-edge companies, is a snapshot of innovation in action. These aren’t your run-of-the-mill businesses; they’re the vanguards of technology, communication, and more. From the tech titans to the disruptors, this index mirrors the cradle of innovation, representing the forefront of progress.

As of September 12, 2023, the Nasdaq 100 stands tall at 15,465. A remarkable journey unfolds from its recent past – an ascent that started in August 2023 from the low at 14,612. A resilient climb of 4.9% has followed, surmounting resistance levels, including the 50, 100, and 200 moving averages on the 4 hour timeframe. It has even breached the formidable psychological barrier at 15,500. Now, it is approaching the July 2023 high point of 16,059. Will it conquer this peak, unveiling further possibilities at 16,300 and 16,600? 

The technical indicators tell a bullish story. The MACD signals positive momentum, staying above the zero line and signal line. The RSI also leans bullish, above the 50 level. Yet, a word of caution – the Stochastic indicator lingers in overbought territory, suggesting a possible pause or reversal.

Fundamentals are crucial. The U.S. economy’s performance matters greatly. It showed an annual GDP growth rate of 2.6% in June 2023, surpassing the previous reading, and a slight increase in the unemployment rate coming in at 3.8% August 2023. However, the shadow of inflation, standing at 3.2% in August 2023, looms, albeit partly due to transitory factors like rising energy prices.

Earnings reports and guidance of the Nasdaq 100 components are the heartbeat of this index. In Q2 2023, these companies’ Earnings Per Share increased by an impressive 19.11%. Earnings and revenue growth rates surpassed estimates, showcasing the strength of sectors like technology and healthcare. Positive guidance for the future instils confidence.

So, what’s the verdict? In the short term, optimism prevails, driven by a technical uptrend, strong earnings, and positive risk sentiment. However, there are warning signs – profit-taking, inflation, and uncertain risk sentiment could pose short-term challenges. Therefore, we cautiously rate the index as neutral to bullish in the short term, recognizing the ever-changing market dynamics.

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Francois du Plessis

Market Analyst

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