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Nasdaq 100 Barely Holding Dynamic Support – Will It Bounce?

nasdaq 100
nasdaq

Nasdaq 100 barely holds against the bearish wind that blows on the U.S. stock market. It reached dynamic support given by the neckline of a potential head and shoulders, and bears already prepare to give it a push even lower. However, the series of higher lows, typical in a bullish trend, remains in place. Therefore, the current levels give something to trade for both bulls and bears.

Tesla failed to prop-up the index this week. The much-awaited Battery Day proved to be a fiasco, as no notable improvements were revealed.

Moreover, the more we get closer to the U.S. elections, the more likely it is that the bulls will book profits on the recent rally just so as not to risk it all ahead of a tight election day.

If that was not enough, Goldman just cut its Q4 GDP growth.

Goldman Sachs Cuts Q4 GDP Forecast On No Additional Stimulus

Goldman just announced that it doesn’t believe that the Congress will attach additional fiscal stimulus as we get closer to the elections. Therefore, it revised its Q4 estimate growth to 3% from 6% on a quarterly annualized basis.

All these weigh on the stock market indices and explain the recent weakness seen lately. However, until any of the main indices retrace more than 20% from the highs, we are, at least in theory, still in a bullish market.

Nasdaq 100 Technical Analysis

The daily chart speaks for itself. Bulls may want to go long at current dynamic support, targeting 11,800 in the short run and a new higher high in the long one. For this, they need a stop-loss order at 10,000 – such a move would invalidate the higher lows series. Therefore, not a pretty risk-reward ratio for going long the Nasdaq 100 index.

On the other hand, the risk-reward ratio is much better for shorts. Selling at market and targeting the measured move of the head and shoulders pattern makes sense while having a stop-loss order at 11,500.

Nasdaq 100 Price Forecast