Nasdaq 100: Event Risk Needs to be Accounted For
Last week was a tough one for stocks in the Nasdaq 100, as a bout of risk aversion saw the index unwind over 50% of its gains generated after Donald Trump’s win in the Presidential election on November 5th.
So far this week, the index has stabilised, and yesterday’s 0.6% rally ended a five-day run of losses. However, technology stocks are still in focus, given Nvidia, the world’s second largest company, with a market capitalisation of over $3.4 trillion reports its earnings tomorrow after the close.
Nvidia’s chips are seen by many as the bellwether for artificial intelligence demand, so this earnings release and any forward guidance for performance in 2025 may influence the direction of the Nasdaq 100 given the company’s heavy index weighting.
Combine this with an increased level of focus on the war in Ukraine, after the US decided over the weekend to allow Ukrainian forces to use their long range missiles, and a number of Federal Reserve speakers scheduled to talk, it may be a volatile end to the week again for the Nasdaq 100 depending on market conditions.
Increased risks in trading the Nasdaq 100 during such high-impact events such as the Nvidia earnings release should not be forgotten.
NASDAQ 100 – Testing Trendline Support
The strong US equity performance following the Trump victory stalled on November 11th at 21247 and a correction period has materialised from these upside extremes. The setback within the NASDAQ 100 accelerated into the weekend, seeing the index approach a potentially important support level at 20372.
This trendline support from the August 5th low, indicates where positive price action has been reflected by a pattern of higher highs and higher lows in price, with an uptrend connecting these lows marking a support focus.
We don’t yet know if the support will hold or give way, but it could potentially lead to resumption of upside on a successful hold, or an extended fall, depending on market conditions at the time.
What are the Important Levels to monitor on the Downside?
As we have said, the uptrend support currently stands at 20372 and defence of this level will be monitored over this important event. Closing breaks may see increased volatility and could potentially lead to further declines, depending on market conditions.
The next support if the break does materialise could be 19888 which is the October 31st low, or if a deeper decline develops, perhaps to 19719, which is the 38% Fibonacci retracement of the previous August/November phase of strength.
What are the Important Levels to monitor on the Upside?
A hold on the trendline at 20372 may see the index resume to the upside, although an important resistance level could prove to be 20827, equal to half the latest sell-off. This resistance area giving way may increase the potential for further development of the uptrend, suggesting the possibility for moves towards 21247, the November 11th all-time high.
It should be stressed, that breaks of support or resistance levels are based on hypothetical scenarios and while previous breaks of similar levels may have resulted in further price moves, past performance is not indicative of future results.
The material provided here has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Whilst it is not subject to any prohibition on dealing ahead of the dissemination of investment research we will not seek to take any advantage before providing it to our clients.
Pepperstone doesn’t represent that the material provided here is accurate, current or complete, and therefore shouldn’t be relied upon as such. The information, whether from a third party or not, isn’t to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product or instrument; or to participate in any particular trading strategy. It does not take into account readers’ financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of Pepperstone, reproduction or redistribution of this information isn’t permitted.
So far this week, the index has stabilised, and yesterday’s 0.6% rally ended a five-day run of losses. However, technology stocks are still in focus, given Nvidia, the world’s second largest company, with a market capitalisation of over $3.4 trillion reports its earnings tomorrow after the close.
Nvidia’s chips are seen by many as the bellwether for artificial intelligence demand, so this earnings release and any forward guidance for performance in 2025 may influence the direction of the Nasdaq 100 given the company’s heavy index weighting.
Combine this with an increased level of focus on the war in Ukraine, after the US decided over the weekend to allow Ukrainian forces to use their long range missiles, and a number of Federal Reserve speakers scheduled to talk, it may be a volatile end to the week again for the Nasdaq 100 depending on market conditions.
Increased risks in trading the Nasdaq 100 during such high-impact events such as the Nvidia earnings release should not be forgotten.
NASDAQ 100 – Testing Trendline Support
The strong US equity performance following the Trump victory stalled on November 11th at 21247 and a correction period has materialised from these upside extremes. The setback within the NASDAQ 100 accelerated into the weekend, seeing the index approach a potentially important support level at 20372.
This trendline support from the August 5th low, indicates where positive price action has been reflected by a pattern of higher highs and higher lows in price, with an uptrend connecting these lows marking a support focus.
We don’t yet know if the support will hold or give way, but it could potentially lead to resumption of upside on a successful hold, or an extended fall, depending on market conditions at the time.
What are the Important Levels to monitor on the Downside?
As we have said, the uptrend support currently stands at 20372 and defence of this level will be monitored over this important event. Closing breaks may see increased volatility and could potentially lead to further declines, depending on market conditions.
The next support if the break does materialise could be 19888 which is the October 31st low, or if a deeper decline develops, perhaps to 19719, which is the 38% Fibonacci retracement of the previous August/November phase of strength.
What are the Important Levels to monitor on the Upside?
A hold on the trendline at 20372 may see the index resume to the upside, although an important resistance level could prove to be 20827, equal to half the latest sell-off. This resistance area giving way may increase the potential for further development of the uptrend, suggesting the possibility for moves towards 21247, the November 11th all-time high.
It should be stressed, that breaks of support or resistance levels are based on hypothetical scenarios and while previous breaks of similar levels may have resulted in further price moves, past performance is not indicative of future results.
The material provided here has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Whilst it is not subject to any prohibition on dealing ahead of the dissemination of investment research we will not seek to take any advantage before providing it to our clients.
Pepperstone doesn’t represent that the material provided here is accurate, current or complete, and therefore shouldn’t be relied upon as such. The information, whether from a third party or not, isn’t to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product or instrument; or to participate in any particular trading strategy. It does not take into account readers’ financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of Pepperstone, reproduction or redistribution of this information isn’t permitted.
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