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Trends & Analysis
News

Shares of Delta Air Lines shorted on earnings miss

News

Add Amazon ahead of earnings?

News

Crude oil slides on rise in US inventories

News

PepsiCo’s shares gain despite 2024 outlook cut

News

British pound continues last week’s downtrend

News

Is Microsoft too cheap to ignore?

Asset Watch

Where could the NASDAQ 100 bottom?

Tuesday, August 22, 2023

After rallying uninterrupted for much of 2023, the NASDAQ 100 has printed red candles for the last three weeks. And with the weakness bringing the bears out of hibernation, Michael Burry – famous for shorting the housing market in 2008 – placed big bets against the index.
Recent securities filings showed the money manager wagered $739 million (notional) in put options against an ETF that tracks the NASDAQ 100. For context, put options profit when the price of an asset declines. As a result, we may find out soon if these bets prove prescient.
For example, the NASDAQ 100 demonstrated a clear pattern during the 2020-2021 bull market. The blue line below shows how the 20-week moving average remained support throughout the momentous run and largely marked the bottom.

Similarly, after a breakdown below the 20-week MA occurred in January 2022, the metric became resistance in March and December 2022. A rally above the 20-week MA occurred in July/August 2022, but it ultimately failed, and the index sunk to new lows.

More importantly, we’re approaching a make-or-break point in 2023. If the bulls mount a defense, the downside could be roughly 300 points until the 20-week MA hits. In addition, the horizontal red line at the bottom shows how the index’s weekly RSI bottomed near 55 during the 2020-2021 pullbacks, and that level is also approaching.

So, is the NASDAQ 100’s dip a correction within a bull market or something more sinister?


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