When Will the Nasdaq 100 be Ready to Roll Over?

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If we trust the positioning indicators from largest FX and CFD brokers, then the average retail trader has been betting on a lower Nasdaq 100 for months now. It must have been a painful ride as the index is up by 60% from its 2020 lows. 

The technical outlook remains upwards for now as the Nasdaq 100 is still creating higher and higher lows. However, the index did also created a double top at 11079. It reached these levels on July 13 and 21. For July, the index looks to close out for a gain of 4.15%, but it was up by 9% at one point. This is another way showing that the momentum has slowed. 

 

Covid-19 Deaths Rack up

Weighing on the Nasdaq 100 is the ever-increasing number of people dying of Covid-19. On July 29, 1485 people died in the USA, and this was the highest level since May 28. 

The daily record was 2749 deaths on April 21, and we are still about 55% below that maximum. Yet with daily new infections being around 67K over the last seven days, the pressure remains high on the US health sector, and capacity is filling up fast. 

 

A second lockdown? 

The threat of a second lockdown is looming, or at least a hit to consumer confidence, but this has not been priced into the Nasdaq 100 as of yet.  A break to the July 24 low would be a sign of this happening, and if it indeed happens, then it might open the door for a slide to the June 28 low of 9792. As long as the July 24 low acts a support the Nasdaq 100 might reach the June 28 high of 10772, followed by the all-time high of 11079, and the average retail trader could continue to handing over their money to the trend followers.

 

Nasdaq 100

 

Written by Alejandro Zambrano, Chief Market Strategist at ATFX UK.

 

 

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