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Trends & Analysis
News
Is Amazon a best-buy for the holidays?
News
China stocks end mixed despite PBoC announcement
News
Asia stocks rise on prospects of Fed easing hikes
News
HP joins the tech layoff spree
News
Will the euro give the bulls 200 reasons to smile?
News
Best Buy shares spike amid upbeat Q3 print

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Asset Watch

Is the NASDAQ 100 dead money?

 

Tuesday, November 8, 2022

After Fed Chairman Jerome Powell dropped the hawkish hammer on Nov. 2, risk assets fell off a cliff. And with the central bank chief noting that the, “ultimate level of interest rates will be higher than previously expected,” he quashed any hope of a dovish pivot.
But after a resilient rally unfolded on Nov. 4, will the momentum persist? Or will the NASDAQ 100 break bulls’ hearts once again?
In abnormal fashion, the NASDAQ 100 has been a major laggard since the S&P 500’s rally off of Oct. 13 lows. And with economically-sensitive sectors like energy, industrials, financials and materials doing nearly all of the heavy lifting, the blue line shows how the Dow Jones Industrial Average (DJIA) has substantially outperformed the NASDAQ 100 since late August and for much of 2022.

While investors have rotated out of big tech in droves, one positive may be lurking beneath the surface. For example, hammer candles occur when an asset endures a large intraday swing and then closes near its high. And with the NASDAQ 100 achieving this milestone on Nov. 4, it’s a constructive development.

The last two times the pattern emerged, the NASDAQ 100 recorded brief trough-to-peak rallies of 10.7% and 12.2%, respectively.

Will big tech regain its mojo? Or should you stick with the cyclical sectors that continue to outperform?


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