The Nasdaq 100 has recovered from the recent sell-off and is aiming at resistance levels despite a big rise in outflows from technology ETFs. Retail investors have been a big driver of market gains this year but the recent 13% drop in the Nasdaq has seen investors get cold feet, with many fearing that a vaccine breakthrough will see stocks pullback further.
Exchange-traded funds, which contributed to much of the years’ tech sector inflows and price gains saw $1.23 billion worth of outflows in the week to Septmeber 23rd, which was the largest reversal since December 2018. It was also the first sign of outflows since the March crash in stocks caused by the virus lockdowns.
The high in the stock market was September 2nd and the brisk correction will have caused fear amongst retail investors who thought the stock markets could only go higher. The recent outflows are a worry that one pillar of support for market gains is disappearing.
The economic calendar is packed with market-moving potential this week as the U.S. sees finalized GDP for the second quarter on Wednesday, followed by PCE and manufacturing numbers on Thursday, then non-farm payrolls on Friday. We also have the first Presidential debate on Tuesday between President Donald Trump and Democrat hopeful Joe Biden.
The Nasdaq has found support at the 11,000 level, which was a high in July before the August breakout higher. The market is now testing the 50-day moving average at 11,240 and this will be the key level for the start of the week. Resistance comes in at 11,500 and a move above there could target the highs at 12,400 once more.
