NASDAQ decision zone – dark clouds or purchase opportunity?

What is going on with NASDAQ? This is the question on many analysts’ minds at the moment; one or two are even speaking of a bubble starting to burst and referring to the past turn of the millennium with admonishing finger-wagging.

In the last few weeks, the technology index, in comparison to the Dow Jones and the S&P 500, performed the weakest and is now heading towards a critical decision zone. After its break, from a technical point of view, several bulls would exit the market and close or even reverse their positions.

Is there any truth to the worries? In this technical analysis, we will provide an overview.

 

NASDAQ100 daily chat with outlook

NASDAQ100 daily chat with outlook

 

Daily chart

On the daily chart, it becomes clear how far the prices already are into the movement. From a technical perspective, the pure chart has been in need of a correction for a considerable amount of time. But as long as the upward trend remains intact, everything is still long here.

In the last few weeks, the prices have given up again and again. The all-time high has not been touched since the 9th June. From a technical point of view, we can also see a sort of downward trend on the daily chart, which is already making one or two bulls sceptical. Upon closer observation, however, everything there is within inside bars – we cannot speak of a textbook downward trend here.

However, if the prices significantly undercut the low at 5550 points, we will have a break of the upward trend, which  would be clearly identifiable for every market participant.

 

NASDAQ hourly chart with downward trend

NASDAQ hourly chart with downward trend

 

Hourly chart

The hourly chart could hardly be any clearer: the bears are on the loose here, repeatedly letting off steam with strong sell-offs. The SMA50 has already been taken out, for the first time this year, and currently in the hour, nothing more is long, at any rate.

The markets will watch closely how the prices develop after the US holiday. Will we see a break of the upward trend or will it once again be “buy the dip!”, meaning we reach new all-time highs this year?

 

Similarly in focus, the so-called FAANG stocks:

The influence of the FAANG

FAANG is an acronym for the 5 most well-known and top-performing technology stocks: Facebook, Apple, Amazon, Netflix and Alphabet (Google). Due to their weighting and popularity, these stocks have significant influence on the NASDAQ.

 

GOOG daily chart with broken uptrend

GOOG daily chart with broken uptrend

NFLX goes down in the daily chart

NFLX goes down in the daily chart

 

Google has turned the uptrend in a fresh new downward trend. Netflix has also closed below the low on the daily basis, thereby heading for a downward trend. The other FAANG stocks are still holding on, but are also showing bearish signals, such as a downward trend in the daily chart for Amazon.

 

Short and sweet

In comparison to the Dow Jones and S&P 500, NASDAQ is showing the most weakness and is now located at a decisive point in which it may come to a break with possible strong sell-offs. The FAANG stocks, which have great influence on the NASDAQ, have already partially broken downwards through important zones.

Whether the market will answer with “buy the dip!”, whether it will break the trend or perhaps even just get the stops, will reveal itself in the next few days. But one thing is clear: the bulls are currently being confronted by a fierce headwind in the NASDAQ, and are advised to be cautious.

Neither the author nor our company is invested in the securities and underlyings discussed at the time of publishing this analysis.

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NASDAQ decision zone – dark clouds or purchase opportunity?
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