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Trends & Analysis
News

PepsiCo posts earnings beat, but misses on sales

News

Crude oil spikes after US inventories data

News

Risks on the horizon for the S&P 500?

News

GBP/USD retreats after hitting 1-month high

News

US dollar recovers from last week’s losses

News

Should you own Meta Platforms or Alphabet?

Asset Watch

Is the NASDAQ 100 confronting a correction?

Tuesday, March 19, 2024

It’s been an epic run for Big Tech’s elite, as workhorses like NVIDIA have carried the NASDAQ 100 and S&P 500 to record highs. And as overbought technicals and euphoric sentiment are often precursors to pullbacks, Goldman Sachs’ trading desk told clients on Mar. 14 to buy Cboe Volatility Index (VIX) call options.
The VIX often rises when the S&P 500 falls because traders rush to hedge the potential downside. Its team wrote:
“Over the past 30+ years, [the] VIX has averaged 19 in April, and we see upside risks to the current low VIX levels given current macro environment and upcoming macro/micro catalysts. S&P 500 index skew is close to multi-year lows, indicating that the upside asymmetry is crowded, and we believe VIX calls would be an attractive hedge in case of a pullback in equities.”

With investors overwhelmingly bullish, a shock event could reverse this sentiment and cause index drawdowns. Therefore, a couple of key NASDAQ 100 levels should be on your radar.

The November 2021 high near 16,765 is initial support, and further strength should emerge around the 10-month MA (near 16,133). It held throughout the 2020/2021 bull run and acted as support in October/November 2023, which makes the outlook positive as long as the NASDAQ 100 trades above it.

So, is volatility about to strike, or will Big Tech showcase its invincibility once again?


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