We do not wish to make anybody panic, however a great argument can be produced strongly securing tech stock holdings. If my memory serves me properly, we have not shared this month-to-month chart considering that late 2021 (when it was included on the December 21st, 2021, episode of Mad Money). At the time, we were worried about the unhealthy, steeply sloped rally. Ever since, the NASDAQ 100 fixed from simply under 17,000 to simply over 10,000, later on rallying back to make brand-new all-time highs. Those brand-new highs are raising some red flags.
Regardless of the deep correction, the gains are still extremely outsized relative to historic booming market trajectories. The dotted black line represents a natural market slope on the offered regular monthly NASDAQ 100 futures market chart. It is simple to see that regardless of the food digestion from late 2021 through the fall of 2023, the rally is still statistically ahead of schedule.
Worrying is the divergence in the RSI (Relative Strength Index). In 2021, near the peak, the RSI on a month-to-month chart read 78.00. Today, with the NASDAQ 100 at a greater rate, the RSI is still under 70.00. This kind of detach in between rate and oscillator is typically a warning for pattern fatigue.
We saw that drawing a trendline from the dot.com bubble high through the 2021 high develops a trendline that might act as quick resistance at simply under 18,000 (not far from current highs). Is this trendline approximate? Perhaps, however in my experience, easy lines made use of a chart work much more typically than they should.
If we wished to think the chart complete stop, we might make an argument that the NASDAQ 100 might fix to under 12,000. We aren’t all set to “purchase” into that theory simply. Election years are usually great for markets, and the January barometer recommends 2024 is statistically set to be a favorable one overall. A correction appears impending.
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