Nasdaq 100 Reverses 3-Day Losing Streak: What Happens Next?

nasdaq 100 futures

The Nasdaq 100 futures are reversing three days of losses as they are presently up by nearly 142 points as at the time of writing. The Nasdaq 100’s upside reversal follows that of the Dow Jones and S&P 500, which are all up on news that the US Congress may approve additional stimulus packages to help businesses recover from the coronavirus pandemic. 

Gains on the Nasdaq 100 are being led by pharmaceutical stocks, many of whom are actively involved in the search for a coronavirus cure or vaccine candidate. Immunic Inc is up nearly 43%, as is Inovio (0.76% higher), Cocrystal Pharma (14.85%) and Bionano Genomics (7.25%). Quest Diagnostics is 3.8% higher after posting better-than-expected earnings, even as the company is testing a diagnostic tool that detects coronavirus antibodies in recovered patients, which could potentially open a new treatment channel.

On the tech front, Facebook’s announcement of the acquisition of a 10% stake in Indian company Jio Platforms (worth $5.7billion) is driving the stock 3.8% higher as investors await the company’s plan to leverage on the 388 million subscribers that Jio offers. Chipmaker Advanced Micro Devices (AMD) is also up by 3%, while SNAP (Snapchat’s parent company) is leveraging on solid earnings for Q1 2020 to post a 20% premarket spike.

The rise in these stocks is overpowering the disappointing performances of traditional high flyers on the Nasdaq 100 such as Netflix, which is down by 1.5% despite exceeding subscriber growth targets.  

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Technical Outlook for Nasdaq 100

The bounce on the 8442.5 support provided the impetus for today’s upside, which puts the Nasdaq 100 on the pathway to retesting Monday’s resistance at 8691.0 resistance. Advance beyond 8691.0 allows the Nasdaq 100 to test last Friday’s top at 8945.7. 

In looking at what the future holds for the Nasdaq 100, we need to ask: is the index making higher highs/higher lows (uptrend) or lower highs/lower lows (downtrend)? The monthly chart shows that the lows of March/April 2020 coincide with the previous resistance zone formed by the tops of the monthly candles of April – September 2019, which seems to suggest that the recent price slump was a long-term pullback in the Nasdaq 100’s 100’s term uptrend. In the short-term, we need to see price pushing above the 8945.7 resistance to register a higher high. Combined with the higher lows of recent price action, this sets the stage for a resumption of the uptrend, aiming for possible upside targets at 9092.3, 9167.4 and possibly 9264.4. 

If price fails to ascend above 8945.7, this arrests the uptrend recovery and allows the Nasdaq 100 to either range trade between 8945.7 above and the site of recent lows at 8442.5. A drop below 8442.5 targets 8160.2. However, only a decline below 8442.4 (site of multi-month lows at 4 November/3 December 2019, 28 February/9 April 2020) will allow price to resume the short-term downtrend. 

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