Nasdaq 100’s Current Consolidation Could be Historically Conceived

The Nasdaq 100 (NDX) has lost its title as the most consistent price gainer in the equity space, following a displacement of volatility and a rotation in sectoral demand. The tech-heavy index has climbed by about 7% in its month-to-date standings. However, the Dow Jones (DJIA) and the small-cap Russell 2000 index have grown by about 11% and 18%, respectively, in the same period.

As a result, the NDX to DJIA ratio has fallen close to its lowest point in the past five months, indicating the shift in investor interest. Regardless, the overall outlook of all US indices remains on the upside.

The recent announcements of potential COVID-19 vaccines most likely played determining roles in the shift in investor interest across sectors.

However, a crucial unrecognized factor also playing a role in the recent sectoral switch is seasonality.

Apparently, since 1980, October has always been the highest-volatility period on average—based on measurements from the VIX—with subsequent months witnessing a steady decline in panic by investors. That said, the last two months of the year have always been very positive for the Nasdaq 100, Dow, and S&P 500 (SPX) for the past four decades. With this, it could mean that the slowdown seen in the NDX could be a replay of history.

Nasdaq 100 (NDX) Value Forecast — November 24

NDX Major Bias: Sideways

Supply Levels: 12040, 12200, and 12439.

Demand Levels: 11800, 116507, and 11307.

The NDX has remained in a tight consolidation range between 12040 and 11800 for the past two weeks now. With no direction in mind for the meantime, the NDX might fall under the sway of new developments surrounding the COVID-19 pandemic and tomorrow’s FOMC meeting minutes.

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