Asset Watch
Thursday, October 20 2022
Historically, the NASDAQ 100 acts as a high beta version of the S&P 500, meaning the former rises and falls by more than the latter. And given the magnitude of the recent underperformance, the NASDAQ 100 offers relative value.
The NASDAQ 100/S&P 500 ratio ended the Oct. 18 session near its May and June lows. Back then, the NASDAQ 100 went on to outperform the S&P 500 for several weeks thereafter. Additionally, the ratio’s daily RSI hit a low of 32 in May, while the October low was 28 (the black circles at the bottom of the chart). Therefore, it’s more oversold than it was then.
As a result, does the NASDAQ 100 offer the best risk-reward when positioning for a Santa Clause rally?