The Nasdaq 100 index has opened lower, as have other US markets on the back of the spreading coronavirus pandemic within the US and also new resolutions from the Fed following completion of annual stress tests.
The Nasdaq 100 composite index is down 1.33% and currently trades at 9976 after a record number of new coronavirus cases cropped up in the US on Thursday. The Fed’s decision to place a limit on payouts made to investors as well as the results of the annual stress tests conducted by the apex bank in the US is weighing heavily on investor sentiment. The Fed has also suspended share buybacks for Q3 2020 to enable banks to boost their capital reserves.
Despite all banks passing the traditional stress tests, Fed Governor Lael Brainard noted that many banks would be operating too close to the minimum capital requirements. Investors are digesting the outcome of the tests and are concerned about the situation, prompting today’s selloff.
Today’s steep drop is now targeting the 9867.1 intraday lows for the week after yesterday’s recovery action failed to reach the 10156.50 previous all-time high. If the negative sentiment persists and 9867.1 yields to selling pressure, the next support target at 9730.2 could come into the picture. Further downside targets within the channel include 9626.4, which interacts with the channel’s trendline. A breakdown of the channel’s trendline is what could bring in the next support levels at 9452.0 and 9264.4 as potential new targets.
On the flip side, an intraday recovery still has 10156.5 as the immediate upside target. Only a break above this price level would see the Nasdaq 100 aiming for the record high at 10308, beyond which 10291.5 (227.2% Fibonacci extension from the wave that extends from the 10 March high to the 23 March low) becomes the next rational target.