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Nasdaq 100 & Dow Jones Value Outlook:
Nasdaq 100 Suffers Breakdown as Dow Jones Treads Water – Inventory Market Forecast
The Nasdaq 100 and Dow Jones have continued decrease this week as rising Treasury yields give traders a purpose to contemplate publicity elsewhere. That stated, the longer-term fairness outlook stays encouraging as inflationary pressures and rising yields are underpinned by expectations of a robust US economic system. Nonetheless, fairness weak spot might persist within the coming days as traders ponder portfolio allocations amid the shifting market surroundings and the Nasdaq 100 seems exceedingly weak.
Nasdaq 100 to Dow Jones Ratio – Tough Development to Worth Proxy
Chart created in TradingView
To make sure, the tech-heavy Nasdaq 100 is located on the extremes of the market’s danger curve which has left it uncovered as traders look to reposition. It’s reasonably unsurprising, then, that the Nasdaq 100 has seen its losses outpace that of the S&P 500 and the Dow Jones. Steeper declines have additionally seen the technical panorama weaken, most notably with a break under the March 2020 trendline, which can enable for an extension decrease and a continuation of the shift from development to worth.
Nasdaq 100 Value Chart: Day by day Time Body (January 2020 – February 2021)
Final week we highlighted 13,315 as a possible line within the sand that would see losses speed up if pierced. Evidently, 13,315 fell in brief order and an extension decrease was delivered. The rising trendline had guided the Nasdaq 100 increased since March and a break beneath is a considerable blow to the index’s technical panorama. Staving off additional losses within the days forward might show essential for tech shares.
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To that finish, months of positive aspects have created a plethora of subsequent assist for bulls to work with. As current worth motion would possibly recommend, the late January low close to 12,727 might present a modicum of assist. The 12,500 space barely decrease nonetheless might function the subsequent main zone earlier than giving strategy to the 200 day transferring common close to 12,000.
Dow Jones Technical Forecast
In contrast to the Nasdaq 100, the Dow Jones has been capable of tread water close to document ranges and create a collection of lengthy decrease wicks within the course of. Ought to turbulence proceed, the Dow can look to a significant confluence of assist from 31,130 to 30,865. Critically, the Dow has maintained the trendline extending from March and trades above its 50-day transferring common.
Dow Jones Value Chart: Day by day Time Body (January 2020 – February 2021)
Suffice it to say, the rotation from high-flying expertise shares into extra affordable worth or industrial shares that has been unfolding as a consequence of shifts on the basic aspect of the market has created divergent footage within the technical panorama. With Treasury yields and inflation expectations on the rise and the opposing technical footage on the 2 main US indices, it could seem the rotation could also be set to proceed within the days forward.
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Weekly Inventory Market Outlook
Merchants can look to strategy this dynamic by means of bullish publicity to the Dow Jones and simultaneous bearish publicity to the Nasdaq 100. Such positioning can be effectively suited if the pattern continues however just isn’t with out appreciable danger. Additional nonetheless, the chances of revenue and loss are evenly balanced in buying and selling. Within the meantime, observe @PeterHanksFX on Twitter for updates and evaluation.
–Written by Peter Hanks, Strategist for DailyFX.com
Contact and observe Peter on Twitter @PeterHanksFX