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Dow Jones, Nasdaq 100 Forecast & Charts: Sell-off Over Already?

Dow Jones, Nasdaq 100 Forecast & Charts: Sell-off Over Already?

2020-02-04 12:00:00
Paul Robinson, Strategist
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Indices Highlights:

  • Dow Jones found near-term support but still vulnerable
  • Nasdaq 100 continues to trade inside rising channel

Dow Jones found near-term support but still vulnerable

The Dow Jones rebounded a bit yesterday and is trying to tack on more gains today, but it still remains at risk of rolling over again. The rebound started from the November high of 28175 (Friday low = 28169), but a turn down from here and break below recent support could lead to another 2%+ in losses.

In the event of more selling, there lies a big area of support at the trend-line rising up from the December 2018 low that passes under the October low. It is currently situated around 27600 or so, depending on the timing of the line being met should the market weaken further.

To negate the short-term negative bias, strength is needed from here to put the Dow back inside the October to January channel, and find limited opposition in doing so. A return back inside the channel followed by buyers stepping up quickly on any weakness, would be a good sign, and could lead to a new record high.

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Dow Jones Daily Chart (still outside October channel)

Dow Jones daily chart

Dow Jones Chart by TradingView

Nasdaq 100 continues to trade inside rising channel

The Nasdaq 100 continues to be the leader, with it very near record highs still despite the recent flurry of selling in stocks. This is largely due to the fact that it is largely dominated by a handful of names (ie FAANG+MSFT), and those stocks have mostly jumped higher on earnings announcements. But nevertheless, the index sits perched strongly, and until it breaks down from the rising channel dating back to October, it is difficult to hold anything but a near-term neutral to bullish outlook. A break outside the channel doesn’t of course guarantee that the NDX will fall, but it will give rise to the odds of such an event.

Nasdaq 100 Daily Chart (channel acts as bull/bear guide)

Nasdaq 100 daily chart

NDX Index Chart by TradingView

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---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX

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