Nasdaq 100: A Reset For The Bulls

Nasdaq 100 on course for a potential multi-week mean reversion decline.

Medium-term technical outlook on Nasdaq 100 (US Tech 100)

click to enlarge charts

Key Levels (1 to 3 weeks)

Intermediate resistance: 8350

Pivot (key resistance): 8450/500

Supports: 8075/8000

Next resistance 8720

Directional Bias (1 to 3 weeks)

The US Tech 100 (proxy for Nasdaq 100 futures) has started to roll over in the past two days with a slide of 3.4% from its current all-time of 8454 printed in 27 Nov 2019 reinforced by the latest protectionism aka “Tariff Man” stance’s from U.S. President Trump and a tic for tact retaliation measure from China that may publish a list of “unreliable entities” that can lead to sanctions against U.S. companies in order to “punish” U.S Congress from interfering in China’s sovereign affairs over human rights disputes in Hong Kong and Xinjiang.

Bearish bias in any bounces below 8450/500 key medium-term pivotal resistance for a potential multi-week corrective down move to target the 8075/8000 support before another likely impulsive up move sequence unfolds.

On the other hand, a clearance with a daily close above 8500 continues the relentless uptrend to towards the next resistance at 8720 (Fibonacci expansion cluster).

Key elements

  • The last 2 days of down move seen in the US Tech 100 Index has almost wiped out the 50% of the gains recorded in Nov and reintegrated by below the upper boundary of the “Ascending Wedge” from 25 Apr 2019 high now turns pull-back resistance at 8350.
  • The two biggest component weightage stocks in Nasdaq 100; Apple and Microsoft with a combined weight of 23% has started to show signs of potential mean reversion decline towards 232 support for Apple and 144/141.70 for Microsoft within their respective major uptrend phase that are still intact (refer to 3rd & 4th charts).
  • In the short-term (1-3 days), the on-going down move sequence of the US Tech 100 from 27 Nov 2019 high of 8454 may now start to see a minor rebound as the 4-hour Stochastic oscillator has traced out a bullish divergence signal at its oversold region which indicates an overextended decline in the short-term.
  • Potential minor rebound stands at 8350 which is defined by 61% Fibonacci retracement of the on-going slide from 27 Nov high to 03 Dec 2019 low of 8165 and the former minor swing high area of 19 Nov 2019.
  • The next significant medium-term support rest at 8075/8000 which is defined by the former medium-term range resistance from 24 Jul 2019 and the 38.2% Fibonacci retracement of the recent up move from 03 Oct low to 27 Nov 2019 high.

Charts are from City Index Advantage TraderPro & eSignal 

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