The Nasdaq 100 is losing steam after China imposed sanctions on 11 Americans, in a retaliatory move following the US government’s decision on Tencent and ByteDance, Chinese companies that operate the WeChat and TikTok apps respectively. US policy actions in Hong Kong are also thought to be a reason behind the Chinese action, according to a Wall Street Journal report.
The eleven Americans sanctioned by China include Senators Ted Cruz and Marco Rubio, former Republican Presidential candidates. The actions by China come not too long after both countries closed each others’ consulates over allegations by the US that apps produced by China were involved in espionage.
The Nasdaq 100 is also feeling the pinch of rising coronavirus cases in the US, as the case count crosses the 5 million mark. The selloff on the Nasdaq 100 is being pushed heavily by healthcare and biotech stocks, some posting losses as high as 59.69% (SCWorx Corp), Reata Pharmaceuticals (30.12%), Addex Therapeutics Ltd (27.90%)
and Recro Pharma (25.23%). It has been quiet on the vaccine development front lately, and this may have caused sentiment on the healthcare stocks to dwindle somewhat.
Technical Outlook for Nasdaq 100
Price action on the Nasdaq 100 continues to be driven by the ascending channel. Today’s selloff continues from Friday’s lower close, as markets ease from the record highs of last week. The next target on the chart appears to be the support at 10866.5. A breakdown of this support level opens the door for the index to head towards 10505.4 (8 July and 30 July lows), with 10307.3 and 10156.5 lining up as potential downside targets. The last three price levels would depend on a breakdown of the channel to be achieved.
On the flip side, a bounce from 10866.5 allows the bulls to come into the fray once more, with 11288.6 (all-time high) serving as the resistance level to beat. A break above this area sends the Nasdaq 100 towards the 1453.1 price level, where the 300% Fibonacci extension from the swing move that began on 10 March and ended on 23 March.
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Nasdaq 100 Daily Chart
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