The Nasdaq 100 has experienced a recent surge in strength, but Credit Suisse economists predict that the index will move lower from its current resistance zone of 12856/81.
The economists believe that the 38.2% retracement of the 2021/22 fall and the year-to-date high at 12856/81 will act as key resistance, potentially defining the top of a broad range for the Nasdaq 100.
Looking ahead, the near-term support for the index sits at 12407. If the index falls below this level, Credit Suisse economists’ view for a drop back to the key 63 and 200-DMA cluster at 11963/05 will gain momentum. A further drop to 11695 could indicate a fall back to the “neckline” to the small base from the beginning of the year at 11093.
However, should the Nasdaq 100 manage to achieve a weekly close above 12856/81, it would imply that a more significant move higher can emerge. The resistance that follows at the 50% retracement and summer 2022 high is located at 13603/721.
All in all, current resistance levels signal caution as the index may face difficulties penetrating its current range. Nevertheless, a long-term upward trend remains intact, as the Nasdaq 100 continues to prove a popular choice for investors seeking exposure to growth stocks in the technology sector.
The Nasdaq 100 has been a significant beneficiary of the pandemic’s stay-at-home orders, and the protracted period of economic uncertainty that has followed. The index includes the likes of Zoom, Amazon, Facebook, and Microsoft, high-profile companies whose businesses have thrived while many other sectors have struggled. As a result, the Nasdaq 100 has consistently outperformed its peers, and its future remains bright.
Despite the index’s success, credit analysts have warned that there may be more volatility on the horizon for investors. Some experts predict that sustained inflation, rising interest rates, and the potential for new Covid variants could cause a significant correction in the Nasdaq 100.
The challenges of Covid continue to impact many sectors, and the coming months may continue to be challenging as the world transitions to a post-pandemic new normal. However, many market participants believe that tech companies will continue to play a significant role in driving the economy forward, and analysts predict that they will emerge stronger once the worst effects of Covid have subsided.
In conclusion, the outlook for the Nasdaq 100 remains relatively positive, provided that the current levels of resistance are treated with caution, and high levels of volatility can be tolerated. The underlying trend towards the growth stocks in the technology sector is likely to remain intact, and investors have many opportunities to capitalize on the current market conditions.
