The NASDAQ has been a big bull market but the fundamentals are bearish and the market is at a bullish extreme our view of the fundamentals, sentiment, and technicals enclosed.
The Fed is on course to start cutting back stimulus this year and this is discounted by the market what is not discounted is rate rises will comer quicker than the market expects.
We have slowing US and global growth which can be seen in leading economic indicators such as PMI’s and Price /Earnings ratio’s are at bubble levels. The sentiment towards stocks remains bullish against a bearish fundamental backdrop which points to a correction.
US Interest Rates
In interest rate futures the US 10 year is trading above the 1.60% and the last time this happened NASDAQ futures were some 2.5-3% lower which we can see on the chart below:
Technical Analysis
On the weekly chart, we can see the 20-month moving average has held all corrections on a close basis and if it were to break we could see a big decline to the 14000 then the 120000 level to correct the overbought extreme.
On the daily chart, we have rallied back above the 20-day moving average but have resistance at the 15000 level. If we break below nearby support and the 20 day MA we could see follow-through selling to the downside.
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