- Summary:
- Nasdaq 100 mixed reaction to positive COVID-19 vaccine news highlights a possible double top in place, but shorting the stock market in bullish trend is risky.
The stock markets around the world are celebrating positive COVID-19 news from BioNTech-Pfizer, and Nasdaq 100 jumped close to all-time highs. However, if there is an index most vulnerable at this time, it is the Nasdaq 100.
The positive vaccine news was already expected by the markets. What surprised is the efficacy of the results, as the two companies claim they have achieved 90% efficacy against COVID-19 spread.
For the tech sector, this is bad news. The big tech giants but also other players in the “stay-at-home” sector reacted negatively to the news. The rotation out of the tech seems to be in place. Gold is also down 2% on the news as investors choose the risk-on offered by stocks to the detriment of safety.
So far, the tech sector is in negative territory, but this could change in a blink of an eye after the opening. One curiosity during 2020 was the fact that the tech sector suddenly became “defensive,” and now that vaccines will become available, the tech will take back its role in portfolios.
Zoom Video Communications is down over 11% pre-market as positive vaccine news is bad news for the online communication company. Similar reactions may lead to the Nasdaq 100 index to diverge from the rest of the US stock market. For instance, the Dow Jones is seen close to 30,000 before the opening.
Nasdaq 100 Technical Picture
The spike higher in the Nasdaq 100 index calls for a possible double top around the 12,400. However, shorting the index goes against the general trend, so bears need to be cautious here. After all, even if the tech sector will be affected, the index needs to break some important levels first. For instance, bears may want to wait for the price to break below the rising trendline. If it doesn’t, the path of least resistance remains the upside.
Bulls, on the other hand, will likely use any dip as an opportunity to enter the market. Even if a vaccine is approved, it will take months until becoming available. Plus, these are just preliminary results. Therefore, bulls may want to stay invested as long as the series of higher highs and higher lows remains in place.
Nasdaq 100 Price Forecast
