Does the Nasdaq Need a Pause?
The Nasdaq-100 has been running as investors flock back to growth stocks. But is it time for a pause?
The index has gained each of the five weeks so far this year -- its longest winning streak since November 2021.
Speaking of November 2021, the Relative Strength Index (RSI) ended yesterday at its highest level (73.53) since that same month shortly before the bear market began.
Next is the September high around 12,753. NDQ closed above it yesterday, but it may still represent important resistance.
Third, the upper chart plots the 10-day simple moving average (SMA) in yellow. The lower study is our custom script Distance from MA, which shows Thursday’s close was the highest distance above the 10-day SMA in almost three years. Is the index overbought?
Given the sharpness of the recent surge and the broad negativity in the market, pullbacks could be shallow. But if NDQ gets stuck near the September high, sellers could get active. In that case traders may eye 12,000 as an important level because it was a low in early September and near the highs of November and December.
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This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy. Any opinions expressed herein are those of the author and do not represent the views or opinions of TradeStation or any of its affiliates.
Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: https://www.tradestation.com/important-information.
The index has gained each of the five weeks so far this year -- its longest winning streak since November 2021.
Speaking of November 2021, the Relative Strength Index (RSI) ended yesterday at its highest level (73.53) since that same month shortly before the bear market began.
Next is the September high around 12,753. NDQ closed above it yesterday, but it may still represent important resistance.
Third, the upper chart plots the 10-day simple moving average (SMA) in yellow. The lower study is our custom script Distance from MA, which shows Thursday’s close was the highest distance above the 10-day SMA in almost three years. Is the index overbought?
Given the sharpness of the recent surge and the broad negativity in the market, pullbacks could be shallow. But if NDQ gets stuck near the September high, sellers could get active. In that case traders may eye 12,000 as an important level because it was a low in early September and near the highs of November and December.
TradeStation has, for decades, advanced the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
Important Information
TradeStation Securities, Inc., TradeStation Crypto, Inc., and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., all operating, and providing products and services, under the TradeStation brand and trademark. TradeStation Crypto, Inc. offers to self-directed investors and traders cryptocurrency brokerage services. It is neither licensed with the SEC or the CFTC nor is it a Member of NFA. When applying for, or purchasing, accounts, subscriptions, products, and services, it is important that you know which company you will be dealing with. Please click here for further important information explaining what this means.
This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy. Any opinions expressed herein are those of the author and do not represent the views or opinions of TradeStation or any of its affiliates.
Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: https://www.tradestation.com/important-information.
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