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Brief: Nasdaq 100 at Record High as Fear and Greed Index Soars to 88

Nasdaq 100

The Nasdaq 100 index is down by more than 0.20% in the futures market as worries about the rising US covid infections soar. The index, which tracks the biggest technology firms, is trading at $12,570, which is a record high. At the same time, the closely-watched fear and greed index is at 88, which is a sign that investors are extremely greedy. The CBOE VIX index too has risen by 1.31%.

The biggest concern for the Nasdaq 100 and other US indices is that even with a Covid vaccine, the number of new coronavirus infections is rising. Just yesterday, the country confirmed more than 173,000 new cases, pushing the total number of infections to more than 15 million. Deaths have risen to more than 284,000.

Just yesterday, California recorded more than 30,000 new cases as the governor declared a state of emergency. In effect, most of the state will be under a lockdown in the next few weeks.

Elsewhere, in Asia, the Hang Seng index rose by 0.65% as investors assessed the impact of the ongoing tensions between the United States and China.

In Japan, the Nikkei 225 fell by 0.30% even after the government announced a new $708 billion stimulus package. If the package passes the cabinet and parliament, it will be the third such package. In total, it will bring the total funding to about $3 trillion. It will also be good for Nikkei constituents that will take part in implementing the funding.

Meanwhile, in Europe, futures tied to the FTSE 100 and DAX index are pointing lower as concerns about Brexit remain. This is after the UK and the EU signalled that they were still far apart about a potential deal.

The fear and greed index, which is an important gauge of sentiment is at 88, the highest it has been this year. This is a signal that investors are getting greedy. Notably, most components of the index, including the demand of safe havens, market momentum, put and call options, stock price breadth and strength are in the extreme greed zone.

Fear and greed index chart

Nasdaq 100 technical chart

On the daily chart below, we see that the Nasdaq 100 index crossed the important resistance level at $12,459 yesterday. It then soared to a record high of $12,570. It also moved above the previous ascending triangle pattern.

The uptrend is also being supported by the 25-day and 50-day exponential moving averages. Therefore, I suspect that the index will continue rising as bulls aim for the next resistance level at $12,500.

Nasdaq 100 technical chart

Nasdaq 100