The Nasdaq 100 finished the week on a high note, gaining 2.17% on Friday. Closing above the 100-Day moving Average as inflation fears were forgotten.
As the saying goes, ‘it’s always darkest before the dawn.’ And things were looking pretty dark at one stage last week for the Nasdaq 100.
The tech index had seen considerable institutional selling over the last 2 weeks, as hedge funds rotated out of growth and back into value. As I reported earlier in the week, this had left the market ripe for a short-covering rally.
The rally came just at the right time. The Nasdaq 100 had broken down through the 50 and 100-Day Moving Averages. The only thing left was for the price to break below a major trend line support at 12,930, and things were likely to get much worse.
On Wednesday, the price got down to a low of 12,967 before sharply reversing in the second half of the week. The market’s recovery on Thursday and Friday saw it close 460 points higher than its midweek low.
This has lifted the immediate pressure, and for now, the uptrend remains firmly intact.
Nasdaq Technical Outlook
Next week’s focus will be on whether the Nasdaq 100 can continue higher, clearing the 50-Day Moving Average.
The rally on Friday took the price back above the 100-Day Moving average at 13,277. The Index fell just short in its bid to clear the 50-Day indicator at 13,401 and closed just 8 points short at 13,393.
If the price can establish itself above the key indicators, then technically speaking, there is no reason it can’t continue higher to 14,000.
A failure to hold the 100-Day MA at 13,276 would likely see the market once again testing the major trend support at 12,930. A failure to hold this mark would leave the Nasdaq 100 vulnerable to a steeper decline.