nasdaq
The Nasdaq 100 index is wavering today after rallying by more than 0.80% yesterday. After dropping in the morning session, futures tied to the index have turned positive and are trading at $12,043, which is close to its all-time high of $12,473. At the same time, the fear and greed index has risen to 71, in a sign that greed has returned to the market. Tesla share price is up by 12% in the premarket.
Tech companies that have benefited substantially from the pandemic lagged other companies yesterday. In fact, while the Nasdaq 100 index rose by 0.80%, the Dow Jones and the S&P 500 rose by more than 1%.
The reversal is happening in the futures market where the tech-heavy Nasdaq is up by 0.25% while the other two have dropped by more than 0.30%.
Tech firms struggled after Moderna said that its vaccine was 94.5% effective to prevent Covid. The vaccine is also better than that produced by Pfizer and BioNTech because it can be stored in a normal refrigerator. Pfizer’s vaccine can only be stored in extremely cold freezers, which means that it will not be easy to transport internationally.
Today, enthusiasm of these vaccines has waned as more states in the US announce measures to halt the disease from spreading. States like California, New Jersey, and Michigan have all announced new lockdown measures. And, there are signs that other states will issue such lockdowns, which will be beneficial to the largest tech firms like Microsoft and Amazon.
The Nasdaq 100 is also rising because of yesterday’s news that Tesla will be added to the S&P 500 index. That will lead to more purchases of the stock by tens of index funds that track the index. Indeed, Tesla share price has jumped by 12% in premarket trading.
The Nasdaq 100 index is also rising even as the fear and greed index continue rising. The index, which is a good measure of sentiment in the market has jumped to 71 from 52 a week ago. That means that the index is just a few points below the extreme greed zone.
According to CNN Money, most of the components of the index like the put and call options, safe-haven demand, and junk bond demand have risen to the extreme greed level. The only index in the fear zone is the stock price strength, which measures the number of firms hitting their 52-week highs.
On the daily chart, we see that the Nasdaq 100 index reached an all-time high of $12,473 on September 2. It then dropped and reached a low of $10,647 on 21st and 24th of that month. It then rallied, reached a high of $12,270, pulled back, and is now at $12,040. This means that bulls are still trying to move above the all-time high. Therefore, I predict that the index will continue rising and possibly move above the YTD high of $12,473 before the end of the month.
