NASDAQ Analysis: What’s Driving the Decline?

The price of the NASDAQ on Tuesday saw neither buyers nor sellers able to maintain momentum and a direction. However, Wednesday’s European Trading Session indicates a “risk-off” appetite and other economic factors also point towards an intraday decline. The NASDAQ’s price has so far fallen 0.75% which is untraditionally high for pre-trading hours.

When monitoring the global stock market, investors can see a clear trend for the day. The German DAX trades 0.53% lower, the CAC 0.64%, FTSE100 0.28% and the NIKKEI225 is 0.77% lower. The NASDAQ is currently seeing the second largest decline, second only to the NIKKEI225.

When monitoring the components of NASDAQ’s most influential stocks again they are primarily lower. None of the top 15 influential stocks have held onto their value and of the top 50 stocks only 9 are trading higher. Currently, investors are closely monitoring Meta, AMD and Qualcomm which are declining more than 1.00% and hold a high “weight” within the index. In addition to this, Bond Yields are also trading 0.026% higher and the US Dollar Index is up 0.11%. Both these factors are known to provide short-term pressure and traders will closely monitor if these two assets continue to gain as the US Session approaches.

The above indications are largely known to provide signals for the short term such as the day’s price movement.  However, investors are also questioning what can potentially be triggering the decline? On one hand, the market is pressured by the end of earnings season and “higher for longer” rates. On the other hand, an interim report on the state of the US economy will be published tomorrow, which is also currently putting pressure on the stock market.

Analysts anticipate a decline in the GDP for the first quarter. Analysts expect the figure to drop to 1.3% from 3.4%, with sales within the GDP expected to fall to 2.0%. The national economic slowdown is partly attributed to the high cost of borrowing, and unless the US Federal Reserve begins to lower interest rates, the GDP may revisit last year’s lows. However, lower interest rates are not likely while inflation remains above 3.00%.

In terms of technical analysis, the price has fallen back to the 75-Bar EMA but not the 100-BAR SMA. If the price drops below the average price, this will trigger more certain sell signals for short-medium term. The breakout point for bearish signals currently stands at $18,761.58 and a buy signal will not become active again unless the price crosses above $18,867 (according to Fibonacci).

Michalis Efthymiou

Market Analyst

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