nasdaq
The Nasdaq 100 index closed at a record high as the rotation from value to growth acceleates. The index ended the day at $14,315, which was more than 110% above its lowest level last year. It has gained by about 12% this year alone. On the other hand, the Dow Jones and S&P 500 indices were little changed while the fear and greed index has retreated to 35.
Tesla buy signal. There are two key reasons why the Nasdaq 100 index has rallied recently. First, there are signs that investors will prefer growth stocks to value in the near term even when the Fed turns hawkish. Investors expect that these companies will continue growing even in a high-interest rate environment. Jerome Powell’s dovish tone has also helped the index.
Second, the Nasdaq 100 index has also rallied as investors rush to buy quality growth stocks on the cheap. For example, shares of a company like Tesla have risen by more than 20% from their lowest level in March. Indeed, the Tesla stock flashed a buy signal on Wednesday when it rose above 50-day and 100-day moving average for the first time since March. This is a sign that investors expect the shares to keep rising.
Meanwhile, investors are still fearful, according to the fear and greed index. The index has retreated to 36 as the safe-haven demand, stock price strength, and stock price breadth moves to the extreme fear zone. Market momentum, volatility, and put and call options are in the neutral level.
The daily chart shows that the Nasdaq 100 index rose above the key resistance level at $14,100 this week. This was an important psychological level and the highest level on record. The index also moved above the upper line of the ascending triangle pattern.
It has also moved above all moving averages while the momentum index has kept rising. Therefore, there is a likelihood that the upward momentum will continue, with the next key level to watch being $14,200. However, a drop below $13,000 will invalidate this prediction.
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