05 May

Nasdaq 100 crumbles at an all-time high! What’s next?

May 5, 2021

By Admiral Markets

The Nasdaq 100 crumbled lower after failing to breach its previous all-time high price level around ~$14,070.00. The sell-off in Big Tech hurt all major US indices, with the Nasdaq 100 bearing the brunt of the move.

Apple was down more than 4%, Alphabet and Tesla down more than 3% and Facebook down around 2.8%. The moves lower have been attributed to worries regarding inflation.

Treasury Secretary Janet Yellen did little to calm markets by commenting that interest rates would have to rise to keep the economy from overheating.

Source: Admirals MetaTrader 5, NQ100, Weekly – Data range: from Oct 8, 2017, to May 4, 2021, performed on May 4, 2021, at 8:30 pm GMT. Please note: Past performance is not a reliable indicator of future results. 

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Last five-year performance: 2020 = +47.34%, 2019 = +38.28%, 2018 = -0.55%, 2017 = +30.87%, 2016 = +5.18%, 2015 = +8.28%. 

 

The weekly chart of the Nasdaq 100 index above shows a clear long-term uptrend. However, this week, the price has failed to break through its previous swing high level around the ~$13,900.00 price level.

This will be cause for concern for some bulls as it shows sentiment is weakening with not enough new buyers to drive the price to new highs. However, this could send the index lower, providing potential dip-buying opportunities for long investors.

Source: Admirals MetaTrader 5, NQ100, Daily – Data range: from Aug 13, 2020, to May 4, 2021, performed on May 4, 2021, at 8:30 pm GMT. Please note: Past performance is not a reliable indicator of future results. 

 

The daily chart above shows interesting support zones around the 100-period (green) exponential moving average. Buyers have historically turned up at this moving average before.

If the price continues to fall traders may well look to these historic levels for clues on when the index will bounce higher again and continue the long-term uptrend.

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