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Is NASDAQ 100 Correction Complete?

By Craig ErlamStock MarketsJan 11, 2022 12:51PM ET
www.investing.com/analysis/is-nasdaq-100-correction-complete-200614364
Is NASDAQ 100 Correction Complete?
By Craig Erlam   |  Jan 11, 2022 12:51PM ET
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It’s been a shaky start to the new year, with interest rate anxieties dragging on sentiment and hitting the Nasdaq 100 particularly hard.

The index fell more than 8% over the last week, breaking through key support in the process, which could have led to a much deeper correction. Instead, the index bounced strongly in the final hours of trading on Monday and failed to close below the rising channel.

NASDAQ 100 Daily, 4h Charts.
NASDAQ 100 Daily, 4h Charts.

While a deeper correction could still be in the cards, the false breakout – as it now appears to have been – could signal the end of the panic in tech stocks.

If the index can overcome a few key tests above – potentially aided by earnings season which is about to get under way – it could continue the trend we’ve seen since the lows of March 2020.

The first test is around 15,900-15,922, where prior resistance combines with the 50% Fibonacci retracement level. Above here, around 16,100-16,150 will be interesting, combining the 50/89-day SMA band, with the 61.8 fib and the 55/89 and 200/233-period SMA bands on the 4-hour chart.

A move above here could see the NASDAQ 100 gather pace to the upside.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Is NASDAQ 100 Correction Complete?
 

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Is NASDAQ 100 Correction Complete?

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Comments (8)
Harrsha Suri
Harrsha Suri Jan 12, 2022 12:20AM ET
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NASDAQ 100 is going to be super volatile with market fears, manipulated buying and selling from the institutes, options based gamma squeeze and expansion in play. All conservative investors (70% of retail investors) should stay away from the markets and let the big whales fight and come to a consensus over next few months. Last week and the past 2 days were perfect examples that show how retail investors and traders could get burnt on both ways.
حمزة فرحان
حمزة فرحان Jan 12, 2022 12:20AM ET
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Hello, God bless you, Galia
Adam Paine
Adam Paine Jan 11, 2022 9:41PM ET
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lol, seriously?
Chris Hall
Chris Hall Jan 11, 2022 9:22PM ET
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yep keep creating big and bigger bubbles
Stephen Fa
Stephen Fa Jan 11, 2022 8:02PM ET
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High PE and growth will get hammered as inflation continues its assault on low rates and USD fundamentals.
Bill Riley
Bill Riley Jan 11, 2022 6:56PM ET
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Interest rates caused the dot come bust in 2000, it's just getting started.
Jason Lebron
Jason Lebron Jan 11, 2022 6:30PM ET
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Financials and & Energy are in the real bubble. Technology has simply done what it does. No bubble in the NASDAQ 100.
Peter ONeill
Peter ONeill Jan 11, 2022 6:30PM ET
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Not all of the Nasdaq is madly overvalued based on 2020 & 2021 profits - but a large amount of this was artificial inflation / unsustainable profits made by Fed QE and not by organic growth (e.g. Apple making huge profits from education/governments as people switched to WFH and had to buy phones/computers -  but this revenue bump won't continue).  Plus Apple would need to increase profits by a further 40% in 2022 above record numbers in 2021 to justify a PE Ratio of 32 versus a long-term PE Ratio average of 17. EV, Semiconductors, and anything with the word 'Meta' or 'Crypto' attached are all about 40% overvalued versus fair value  - mainly due to money supply/ mass speculation due to no risk and 0% interest rates. This includes Tesla which now makes up 4.55% of the Nasdaq.
Peter ONeill
Peter ONeill Jan 11, 2022 4:34PM ET
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A correction = a 10%+ drop by definition. Not 8% which is now only 4%. It was a dip - so much money floating around due to Fed debt pumping and interest rates that any dip will be bought... driving the bubble higher. The economy is WAY overheated, highly indebted and overvalued, but Powell would rather pump it higher than let the bubble he built pop. Apart from a few of the main big tech companies who look like maintaining 2020/2021 profit levels - the current market is still about 35% overvalued and can see it all burst in the next 12 - 18 months once that Fed drug has to be taken off / global economies stall with massive debt hangovers and rising inflation.
Jan 11, 2022 4:24PM ET
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Finally a well thought analysis is shared, how refreshing , no corona virus analysis no mention of fake news
 
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