Analysts Remain Concerned Over Nasdaq 100’s “Bubble Effects”


Barely three days after the Nasdaq 100 (NDX) biggest surge since April, most of those gains have been erased and warnings that tech stocks are in a bubble are getting louder.

Wall Street veteran, Ned Davis, lent a voice to the increasing worries over the bubble, citing the rate at which the index was advancing and the soaring share volume as evidence. Meanwhile, the NDX dropped by 2.8% on Thursday, erasing all its gains for the week.

In other news, Tesla (NASDAQ: TSLA) Inc., reported better-than-expected earnings for the fourth consecutive quarter, snapping a hurdle that could cause the electric carmaker to be included in the S&P 500 Index.

Also, Twitter (TWTR) Inc. rose by 6% after a goodish yearly growth of daily users report, despite recent sinking ad sales.

However, of major concern to bulls was the drop in Microsoft (NASDAQ: MSFT) Corp., which dropped by 1.6% as its flagship cloud computing business Azure reported quarterly sales growth below 50% for the first time.

The largest internet and software companies—gathered under the Fang umbrella—has now dropped for several sessions in a row, recording a 4.6% loss since March.

NDX – Hourly Chart

Nasdaq 100 (NDX) Value Forecast — July 24

NDX Major Bias: Bullish

Supply Levels: 10776.3, 10919.4, and 11071.5

Demand Levels: 10372.0, 10063.3, and 9757.1

Although the NDX has been on a bearish streak for some days now, it appears to have found strong support at the 10372.0 level. The NDX is expected to move back into the range of our ascending channel, with the 10776.3 being the immediate target. This bullish move seems even more likely considering that we are now treading in oversold conditions.

On the flip side, a sustained move below the immediate support could open the NDX up to see the 10000.0 level once again.

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Azeez Mustapha

Azeez Mustapha is a trading professional, currency analyst, signals strategist, and funds manager with over ten years of experience within the financial field. As a blogger and finance author, he helps investors understand complex financial concepts, improve their investing skills, and learn how to manage their money.