The Nasdaq 100 index has been trading just above its 100 day moving average (now around 3549) for most of today’s session. The uptrend in the Nasdaq has been so steady over the past year that the Nasdaq 100 has only closed below its 100 day moving on one day over the past year (the bottom on June 24th, 2013):
Clearly, traders are watching the 3650 level as a crucial spot of trend support.
We discussed our general thoughts on the Nasdaq stocks and QQQ in particular in a Name That Trade post on March 10th:
When the Internet bubble popped in the spring and summer of 2000, it was marked by fewer and fewer stocks making new highs, with a small group of “horsemen” doing a lot of the late stage heavy lifting. The rally was getting narrower on what felt like a daily basis, as mini-bubbles in specific sectors had been bursting, leaving only a few mega-stocks to carry the torch.
Is it different this time? Well, from a profitably and valuation standpoint, I would suggest that it is very different among the mega-cap leaders, though perhaps not so different under the hood.
2014 so far is starting to feel eerily familiar. A big difference is that 2013 was a much cleaner uptrend than 1999, especially for the broader market (non-tech) indices.
At this juncture, we are watching the 100 day ma in the Nasdaq with a keen eye after this week’s shellacking. If it breaks, then the S&P 500 likely has a similar test with its 50 day moving average (at 1834) in the coming week.