Nasdaq 100 - Has the Nasdaq 100 index bottomed out?

2 mar 2022

The Nasdaq 100 index fell approximately 22% between 22nd November 2021 and 24th February 2022, with the latter date marking the beginning of the Russian invasion into Ukraine. Since the beginning of this military conflict the Nasdaq 100 index managed to rise approximately 8% which marks its retracement from bear market territory. Recent geopolitical events have a tremendous effect on the world economy as they brought new, even stricter, sanctions against Russia which was banned from the SWIFT payment system. Shortly after, this was followed by numerous multinational businesses deciding to leave the Russian market. Overall, this has great economic implications for Russia as well as the world. Further, this may result in a change of narrative by the FED. We previously noted that we expected upcoming rate hikes to pose a substantial threat to the U.S. economy. Although, odds of a rate hike in March 2022 fell dramatically over the past week. We actually think the FED may postpone its rate hike decision into late 2022 or even into 2023. This could be potentially bullish for the stock market and it could result in trend reversal from bearish to bullish. We will monitor price action closely in the following days as Russia and Ukraine are set to continue peace talks. Progress in these talks would further bolster a bullish case for the Nasdaq 100 index.

Technical analysis - daily time frame
RSI shows divergence (with price making lower low and RSI making higher low simultaneously). Stochastic reversed to the upside altogether with MACD. However, MACD still remains in bearish territory. DM+ and DM- continue to show bearish conditions in the market. However, ADX contains high value which suggests the bearish trend is near its peak or it peaked already. Overall, the daily time frame exhibits first bullish signs of possible trend reversal.

Illustration 1.01

Illustration above shows the daily chart of Nasdaq continuous futures (NQ1!). It also shows the Relative Strength Index below the chart. Divergence can be observable between the price and RSI.

Technical analysis - weekly time frame
RSI and MACD continue to be bearish. Stochastic oscillates in the bearish area, however, it managed to reverse to the upside which is a bullish sign. DM+ and DM- show bearish conditions in the market. ADX grows which suggests the bearish trend of higher degree is gaining momentum. Overall, the weekly time frame remains bearish.

Illustration 1.02

Picture above shows the daily chart of Nasdaq continuous futures (NQ1!). Volume bars are depicted below the graph. Decline in volume since 24th February 2022 can be observed. This may point to decline in selling pressure.

Support and resistance


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DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not serve as a basis for taking any trade action by an individual investor. Your own due diligence is highly advised before entering trade.