- Summary:
- The Nasdaq 100 index declined today but it is outperforming the S&P 500 and the Dow Jones. Analysts at Goldman Sachs are bullish on technology companies.
The Nasdaq 100 index is down by more than 1.20% in the premarket because of the investors’ fear about a second wave of the virus. The index is performing better than the Dow Jones and the S&P 500, which have dropped by 2.27% and 1.95% respectively. This performance could be because of a new bullish call by Goldman Sachs.
Goldman Sachs bets on technology
In a recent research note, David Kostin, a senior analyst at Goldman Sachs said that he was bullish on technology companies and bearish on energy. Technology companies form a significant part of companies in the Nasdaq 100.
In the report, he said that he believed that a combination of incremental data and extraordinary policy support will help power fast-growing technology companies higher. He said:
“But, the combination of incremental data improvement and extraordinary policy support has been sufficient to assure the forward-looking market that the earnings damage resulting from the virus will ultimately be short-lived.”
His sentiment was supported by analysts at Morgan Stanley, who said that they now expect that the economy will have a V-shaped recovery. They cite the recent data and the fact that they have been better than initially expected. For example, data from New York Fed showed that the manufacturing index dropped by -0.2 after dropping by 48.50 a month earlier.
Nasdaq 100 falls as fear and greed index falls
The Nasdaq 100 index is down today even as the fear and greed index moves back to neutral. At the current level, the index is at the lowest it has been since early this month. It means that investors are getting cautious about the bull run.
Tesla share price was among the biggest laggards in the Nasdaq index. It dropped by more than 2.70% because of the company’s China business. It runs a factory in Beijing and a lockdown could lead to weaker demand.
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Nasdaq technical outlook
Nasdaq 100 index declined to an intraday low of $9,500, which is an important psychological level. It is also slightly above the 78.6% Fibonacci retracement level. The price also moved below the ascending trendline, drawn by connecting the lows on May 14 and May 27. Therefore, while the upward trend will remain in the longer term, there is a possibility that the price will retest the 50-day EMA at $9,1160.
On the flip side, a move above $9950 will invalidate this trend. This price is an important psychological level as well as the highest point on Friday.