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The Nasdaq 100 just issued a technical “sell” signal ahead of Nvidia’s big earnings report, according to Fairlead Strategies.
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The sell signal reflects a loss of momentum and points to “several weeks of corrective action, at least,” said Katie Stockton of Fairlead.
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Stockton highlighted the 13,834 level as support for the NASDAQ 100, indicating a potential decline of 6%.
Technology stocks are poised for a further decline yet Nasdaq 100 The indicator issued a technical “sell” signal, according to Just Leadership Strategies Katie Stockton.
In a note on Monday, Stockton highlighted that the Weekly Moving Average Convergence Divergence, or MACD, indicator for the Nasdaq 100 triggered a “sell” signal on Friday. It is the first signal from the indicator since it gave a “buy” signal on November 11th.
The MACD indicator is a trend-following momentum indicator used by technical analysts to show the relationship between two moving averages of a security’s price. The signal line is drawn, which can act as a buy and sell signal. Stockton MACD is used to capture momentum and trend across multiple timeframes. the The indicator is attractive because it is very black and whitewhich leads to either buying or selling.
“This (MACD sell signal) tells us that the market may hold for several more weeks… the situation supports several weeks of corrective action, at least,” Stockton said.
The sell signal comes during a bad month for stocks, as the Nasdaq 100 fell 6% in the month of August. The signal comes only a few days ago Nvidia’s highly anticipated earnings report for the second quarter. The trillion-dollar chip giant reports results after the market closes on Wednesday and investors expect a huge boom in its AI chip business.
Stockton highlighted 13,834 as a key support level for the Nasdaq 100, which represents a potential decline of 6% from current levels.
Pressure on tech stocks this month has been rising interest rates, with the 10-year US Treasury bond rate trading at 4.35% on Monday, its highest level since 2007.
“If we see the 10-year yield clear at 4.34%, the next resistance on the chart, which is the best way to understand the upside, is around 5.25%, and that would be a near-term target.” Stockton told CNBC on Monday.
Such a move higher interest rates It will only lead to more pressure on stock prices. Ultimately, however, Stockton sees the current weakness in stocks as a buying opportunity.
“I think we see this corrective phase as just a corrective phase, something that should lead to a buying opportunity. It comes at a very normal seasonal time for this type of volatility,” Stockton said. “The long-term momentum has gradually shifted to the upside this year, so I think we’ll at least have a chance to take advantage of that during the fourth quarter, even if it’s short-lived.”
Read the original article at Business interested