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NASDAQ 100 Nearing 'Correction' Territory, 200-Day MA In Nearly 2 Years

By Matthew WellerStock MarketsJan 21, 2022 02:47AM ET
www.investing.com/analysis/nasdaq-100-nearing-correction-territory-200day-ma-in-nearly-2-years-200615442
NASDAQ 100 Nearing 'Correction' Territory, 200-Day MA In Nearly 2 Years
By Matthew Weller   |  Jan 21, 2022 02:47AM ET
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We tend to focus on shorter-term performance and trends in our articles, but sometimes it pays to take a step back and look at returns over a longer-term perspective. Going back ten years, here are the annual (price-only, no dividends included) returns of the NASDAQ 100:

  • 2012: +18.1%
  • 2013: +36.6%
  • 2014: +19.1%
  • 2015: +9.5%
  • 2016: +7.0%
  • 2017: +32.7%
  • 2018: -0.1%
  • 2019: +39.1%
  • 2020: +48.6% (!!)
  • 2021: +27.2%

All told, the tech-focused NASDAQ 100 has returned an average of 22.5% annually over the last ten years, compared with “just” 14.7% for the broader S&P 500 index, which has had quite an impressive decade of its own.

Against that backdrop of relentless gains, it’s not surprising that NASDAQ 100 bulls may have grown somewhat complacent. Perhaps that’s why the ugly -7% drop to start 2022 has bulls feeling so uneasy. As the chart below shows, this is the first time since the pandemic began that the index has broken conclusively below its 100-day EMA, and the widely-watched 200-day EMA near 15,000 has now come under pressure:

NASDAQ 100 Daily Chart
NASDAQ 100 Daily Chart

Source: TradingView, StoneX

From a technical perspective, the index remains in a long-term uptrend, and any trader who’s tried to bet against that trend over the last decade has quickly been proven wrong. That said, this dip in the NASDAQ 100 comes at a particularly precarious time; after all, the massive technology stocks that make up a full 45% of its market cap report earnings in the next two weeks:

  • Jan. 25: Microsoft (NASDAQ:MSFT) (9.9%)
  • Jan. 26: Tesla (NASDAQ:TSLA) (4.3% weight)
  • Jan. 27: Apple (NASDAQ:AAPL) (11.8%)
  • Feb. 1: Amazon (NASDAQ:AMZN) (6.9%)
  • Feb. 1: Alphabet (NASDAQ:GOOGL) / Google (7.2%)
  • Feb. 2: Meta Platforms / Facebook (NASDAQ:FB) (4.9%)

One way or another, the outlook for the NASDAQ 100 will be much clearer in two weeks. If investors react positively to these behemoths’ earnings and the NASDAQ 100 holds above its 200-day EMA in the 15,000 area, the longer-term uptrend will likely reassert itself. Alternatively, soft earnings reports and/or guidance, confirmed by a break below 15,000, would see the index get off to one of its worst starts in over a decade.

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NASDAQ 100 Nearing 'Correction' Territory, 200-Day MA In Nearly 2 Years
 

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NASDAQ 100 Nearing 'Correction' Territory, 200-Day MA In Nearly 2 Years

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Comments (3)
BEHJATH USMANI
BEHJATH USMANI Jan 21, 2022 10:22PM ET
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See you at 13, 12.5, 11.5,10.8 Ks
ArlopA Ki
ArlopA Ki Jan 21, 2022 3:11AM ET
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but this has already broken the resistance...!
shayan khan
shayan khan Jan 21, 2022 2:52AM ET
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Tech companies must not fall.. billionaires will only sell less Bec it's a game of life and death... Meta verse is on the way .. i don think it must have huge downfall for tech market..
Ron Love
Ron Love Jan 21, 2022 2:52AM ET
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When panic sets in everything gets sold, no rationality with a crash.
 
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