Nasdaq 100 Slapped in the Face as Tech Meltdown Continues

The Nasdaq 100 index declined for three consecutive days as the sell-off in technology companies accelerated. The index declined to a low of $12,966, which was the lowest level since March 31st. It has declined by more than 8% from its highest level this year.

Technology stocks sell-off

The Nasdaq 100 index declined as investors continued to worry about US inflation and higher interest rates. In a report yesterday, the US said that the headline CPI rose by more 4.2% in April. This was the highest level in more than 13 years and was higher than what most analysts were expecting. Core CPI that excludes the volatile food and energy prices also rose above 2% for the first time since January last year.

Therefore, investors are worried that this inflation will push the Federal Reserve to hike interest rates earlier than predicted. Later today, the Nasdaq 100 index will react to the upcoming producer price index (PPI) data. The numbers are expected to show that the prices of goods consumed by producers rose by more than 5% last month. Furthermore, the prices of most commodities like lumber, coal, and copper has surged in the past 12 months. The index will also react to the latest initial jobless claims numbers.

Only 6 companies in the Nasdaq 100 index rose yesterday. They are Seagen, Incyte, Intuit, Regeneron, Alexion, and Gilead Sciences. The top losers were Moderna, Applied Materials, Lam Research, and Mercadolibre, among others.

Nasdaq 100 index forecast

The four-hour chart shows that the Nasdaq 100 index has dropped substantially in the past few days. The index has already moved below the 25-day and 50-day moving averages. It has also moved below the 50% Fibonacci retracement level. Further, the Relative Strength Index (RSI) has moved to the oversold level of 30.

The index has also formed a rounded top, which is usually a bearish signal. Therefore, the index sell-off may continue as bears target the 61.8% retracement level at $12,922. However, a move above the 38.2% retracement level at $13,365 will invalidate this trend.