Bullish outlook seen for Nasdaq-100
Add BT as a preferred source
ON JAN 18 (Thursday), the Nasdaq-100 Index not only opened higher but also closed at an all-time high, surging by 1.47 per cent. This remarkable achievement was driven by the strong performance of chip and megacap stocks. Leading the market surge were tech stocks, particularly Apple, which received a boost from an analyst upgrade. Despite a decline in profit, Taiwan Semiconductor Manufacturing Company (TSMC) outperformed Wall Street expectations, propelling its shares nearly 10 per cent higher. Simultaneously, shares of AMD and other chip manufacturers mirrored TSMC’s positive momentum. Microsoft and Meta Platforms each gained around 1 per cent, further contributing to the overall market strength, especially as US Treasury yields trended lower.
Meanwhile, the technology-focused Nasdaq-100 Index continued its impressive upward trajectory, reaching a record high of 16,996.98 despite the sharp market sell-off at the beginning of 2024. Notably, on Jan 8, the index rebounded sharply, and has sustained its upward trajectory since then. This robust performance underscores the resilience of the technology sector amid dynamic market conditions.
Bullish scenario
The Nasdaq-100 Index has demonstrated remarkable strength, marking an impressive increase of over 4 per cent in the last two weeks from its recent low of 16,249.19 on Jan 5. This noteworthy rebound has propelled the index to a new all-time high. Additionally, the index’s closing above the 20-day Simple Moving Average (SMA) level indicates short-term strength. It opens the door to the possibility of surpassing the 17,000 level and presents an intriguing prospect of a test at the 61.8 per cent Fibonacci level, situated approximately at the 17,450 region.
Bearish scenario
Based on current analysis, the Nasdaq-100 Index shows signs of a technical reversal pattern, characterised by the index achieving peak prices on two consecutive occasions with a moderate decline in between.
Navigate Asia in
a new global order
Get the insights delivered to your inbox.
The Nasdaq-100 Index has established near-term support, notably at the 50-day SMA level of 16,236. The next support level after that would be the former swing high areas on Nov 29, 2023, situated around the 16,160 area - a point aligning with the 38.2 per cent Fibonacci level.
We see there is potential for a short-term retracement towards the near-term support of 16,236. A failure to hold at this level could signal the onset of a more sustained downtrend, with a subsequent target set at another crucial support zone ranging from 15,700 to 15,535. The continuation of the downtrend becomes a conceivable outcome if the price fails to find support within this specified range.
The writer is equities specialist at Phillip Securities
Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free.
Copyright SPH Media. All rights reserved.
