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Trends & Analysis
News

Gold price plummets to a multi-month low, what is next?

News

Gold loses shine amid strength in US dollar

News

Is Meta Platforms leading the S&P 500?

News

Week Ahead Preview: 2nd of October

News

Carnival shares sink despite Q3 profit

News

US dollar eases from 10-month high


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Asset Watch

Will the NASDAQ 100 regain its leadership?

 

Thursday, October 20 2022

Thanks to inflation, a hawkish Fed and higher interest rates battering big tech, the NASDAQ 100 has materially underperformed the S&P 500 over the last two and a half months. However, Morgan Stanley’s Chief U.S. Equity Strategist Mike Wilson told clients that “we think 4,000 is as good a guess as any [for an S&P 500 bear market rally] and would not rule out another attempt to re-take the 200-day moving average (~4150).” So could brighter days be ahead?
Wilson also added, “…while that seems like an awfully big move […] the 200-week moving average… is hard to take out without a fight.”
While the S&P 500 remains ripe for a short-term rally, is the NASDAQ 100 a better play?
S&P 500 Stock Chart Trading View

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?


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