The Nasdaq 100 just slid below the September 15 low of 7771. On the Nasdaq 100 closing below the support level at 7771, the short-term trend might turn bearish and could send the index towards the next support level, the September 2 low of 7577.
Keeping trader’s mood at low is the latest US consumer confidence index report dropping to a nine-month low. Also, in the last few days, we have received news that Europe is nearing recession per the latest Markit PMI figures; however, this data was ignored by traders. Also, earlier in the month the Nasdaq 100 rose despite the important leading economic indicator, the US ISM manufacturing index, dipping below the important 50 threshold, this report was as also largely ignored.
Instead, the focus has been on central banks providing easy monetary policy, with the Federal Reserve cutting interest rates, and the European Central Bank (ECB) doing the same in the last two week. The ECB took steps further and introduced quantitative easing, however, it appears that the positive vibes of the easing of monetary policy were not enough to lift the Nasdaq 100. Instead it now looks like traders are getting tired and giving up on their positions, sending the index lower.
Earlier this week, I said the Japanese Yen could be on its way up, and given its high correlation to stock markets, it does indicate that the Nasdaq 100 could add to its losses in the days ahead. Traders will be paying attention to the close. If the index manages to close above the September 15 low then the breakdown could be a false one, and this could send the index to test today’s high at 7871. IF not, then the index could near the September 2 low of 7577.