NASDAQ hovers below 3700

The NASDAQ 100 has been dragged lower along with indices worldwide, but this may be just a temporary dip given the strength the index has shown in the past.

The NASDAQ 100 has not been in this area since the distant days of October 2000, when it was heading sharply lower. Now, in common with the other US indices, we can see that the upward trend remains intact. Weakness has crept in today as US markets play catchup with others around the world in response to the crisis in the Ukraine. At present we cannot tell if this is a temporary blip or whether we are in for more volatility (i.e. losses) on major indices similar to that seen in January.

On the daily chart, we can see that the index faltered just above 3700, thus creating a new line of rising resistance. The index had broken out of the rising channel that had been in place since 2009, and thus the upward bound of this channel – which had once been resistance – now becomes support. This suggests that the region around 3580-3600 will see buyers re-emerge if the index continues to drop back in the coming week, ahead of US non-farm payrolls.

A drop out of the new upward channel would mean that the lows of early February, which were just above 3400, would become the next area to look for support. If this fails to hold then the rising trend line from the low of 2009 becomes the next key area.

However, with both the 50- and 200-day moving averages still rising, we could yet see the NASDAQ 100 moving higher in due course provided that the Ukraine situation does not degenerate further. The key test will be whether the bottom end of the new channel can hold. If it does, then further gains above 3700 become likely. 

NASDAQ chart

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