Positive Vaccine Development to Send the Tech-Heavy Nasdaq 100 on a Downward Spiral

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US equity markets went into a frenzy on Monday, following positive results and reporting of a COVID-19 vaccine candidate by Pfizer (NYSE: PFE). The company’s mRNA technology-based vaccine showed a 90% effectiveness result in an initial phase 3 clinical trial. The result was largely better-than-expected, although there are worries that its effectivity could depreciate as the sample size grows. Nonetheless, the market risk tone was heavily stimulated by the report.

Crude oil prices spiked by about 8% before retracing in the late trading hours yesterday. Gold (XAU/USD) fell by more than 5% as hopes for further fiscal stimulus faded.

An effective and readily-available vaccine will be a major game-changer across the financial markets. With a vaccine, business activities are likely to increase dramatically, cutting down reliance on digital facilities. The recent rally in the energy, finance, and industrial sectors alongside the fall in the tech sector like tech-heavy Nasdaq 100 (NDX) paints a good picture of what is to come.

A strong rebound in the demand for travel, tourism, leisure, luxury goods, restaurants, and traditional retail is expected. While demand for digital services may remain, it is likely to be on the lower end. That said, investors appear to have made a significant switch from big tech stocks into the long-underperforming traditional industries last night, highlighting a change in sectoral rotation.

Nasdaq 100 (NDX) Value Forecast — November 10

NDX Major Bias: Bearish

Supply Levels: 11890, 12000, and 12220.

Demand Levels: 11650, 11307, and 11000.

The NDX has come under intense pressure, following the drastic shift in market risk tone. That said, we expect to see further declines in the index’s price soon. Expect to see the NDX hit the 11307 support in the coming hours or days.

On the flip side, the NDX could stall a bit or climb higher, but a break above the 12000 seems very unlikely at this time.

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