Nasdaq 100 hanging on to 13,000 by a thread – will it break?

By now, readers are undoubtedly familiar with the souring backdrop for tech stocks. From the stubbornly persistent inflation readings to the ongoing Russian-Ukraine conflict to the broadly disappointing earnings season, highlighted by big disappointments from Amazon and Netflix, downbeat sentiment abounds for the Nasdaq 100 (US TECH 100) index.

After falling by more than -13% for its worst month since the depths of the Great Financial Crisis, the Nasdaq 100 is testing a key support level near 13,000 as we hurtle toward a highly-anticipated FOMC meeting and another critical NFP employment report later this week. From a technical perspective, the 13,000 area marks previous support from March and last May, as well as the 38.2% Fibonacci retracement of the index’s full post-COVID rally, so traders are watching that area like a hawk heading into this week’s news:

Source: StoneX, TradingView

Notably, bulls are not panicking yet. Based on our internal data, 80% of global StoneX retail client open positions (across FOREX.com and City Index) in the index were on the long side, near the highest levels that we’ve seen in a month. In other words, the clear majority of traders still believe the Nasdaq 100 is heading higher from here. Time will tell whether the “buy the dip” mantra that has been so successful over the last couple of years will deliver again or whether bulls’ luck may finally be running out.

Despite the 14-day RSI not quite being in oversold territory as we go to press, we could certainly still see a bounce if the Fed is more balanced than some traders fear. In that case, the index could see a bounce toward 14,000 in the coming weeks. On the other hand, an unexpectedly hawkish Fed and technical breakdown below 13,000 would open the door for a quick drop toward the December 2020 / March 2021 lows near at 12,250 next.

How to trade with City Index

You can trade with City Index by following these four easy steps:

Open an account, or log in if you’re already a customer

• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore
Search for the market you want to trade in our award-winning platform
Choose your position and size, and your stop and limit levels
Place the trade

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.