The Nasdaq 100 is Nearly 2% Higher Despite Poor GDP: Here’s Why

Summary:
• The Nasdaq 100 is up nearly 2% on the day after optimistic news from Gilead Sciences hit the newswires on Wedesday, raising hopes for a coronavirus cure.

A dose of good news is lifting investor sentiment on the Nasdaq 100 index, prompting a 1.77% rise as at the time of writing. Çhief Medical Officer of Gilead Sciences, Merdad Parsey, revealed that clinical trials of its experimental anti-coronavirus drug Remdesivir in severely ill patients found that a 5-day or 10-day treatment regimen led to hospital discharge of 52% of participants on either dosing regimen after 2 weeks of treatment, and “clinical recovery” in 53% of those patients.
Gilead Sciences stock is up 21% for the year. Trading on the stock was halted before the disclosures on the clinical trials. The positive sentiment generated by Gilead’s report helped the markets ignore the downbeat US GDP report, which showed a -4.8% advance GDP against the -4.0% that the markets had predicted.

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Nasdaq 100 Technical Outlook

The rejection and subsequent pullback move from 8945.7 terminated at the upper border of the descending channel, which had been broken earlier in the week. This border intersects the 8691.0 support, which is the price barrier that exists within the range that has 8945.7 as the ceiling and 8442.5 as the floor.

The price bounce on the channel’s upper border has fundamental backing, and this could allow the Nasdaq 100 to make yet another attempt at breaching 8945.7. It is left to see if today’s bullish price action could give the index enough momentum to break above 8945.7. If this is the case, then 9092.3 becomes the next logical target. Above 9092.3, further upside targets lie at 9157.4, 9264.4 and 9452.0. However, 9264.4 is the 161.8% extension of wave XA in the harmonic pattern. Attainment of this price level completes the crab harmonic pattern and 9452.0 can only be attained if the pattern is invalidated, otherwise the expected move is for a price reversal from 9167.4, targeting all the previous resistance levels mentioned.

On the flip side, failure to breach 8945.7 may allow for another price rejection, which keeps the Nasdaq 100 within the price range that has 8442.5 as the floor. A downside breach of 8442.5 brings 8160.2 and 8015.5 into focus. Price moves continue to remain dynamic on coronavirus-related headlines.