The Nasdaq 100, an index of the 100 largest non-financial stocks listed on the Nasdaq exchange, has been on an upwards trend in recent months; however, a pullback could be on the horizon.
As of this writing, the Nasdaq 100 index is trading at 11,910.47, which is up nearly 17% year-to-date. Investors have been especially encouraged by the performance of big-name Nasdaq 100 components like Apple, Microsoft, Amazon, Alphabet, and Facebook.
But, a pullback for the Nasdaq 100 could be due soon. The advance/decline line, a technical indicator that measures the number of stocks advancing versus those declining, has diverged from the Nasdaq 100 in recent weeks. This could be an indication that the current trend is nearing its end.
Additionally, some of the components that have been driving the Nasdaq 100 higher are over-extended and positioning to pull reverse. For example, Tesla is up 230% year-to-date, and Apple isn’t far behind with a 71.5% gain.
Investors should also be cautious of the return of volatility, which has been largely absent in recent weeks. While a pullback of the Nasdaq 100 could happen at any time, increased volatility could be a signal that a larger correction is due.
Overall, the Nasdaq 100 has been on an impressive run in recent months, but investors should be aware that a pullback is looming. It could be a sign that the market needs a breather, and those gains may not be as safe as some investors think. As such, investors should consider re-balancing their portfolios or taking profits, especially given that the Nasdaq 100 could be in for a bumpy road ahead.
“Nasdaq 100 Ready for Possible Reversal
