There isn’t a denying the power of the bullish major development for shares off the April low. The Nasdaq 100 index continues to make new all-time highs, closing slightly below $480 on Friday after gaining about 3.5% during the last week. However will this unimaginable uptrend proceed into July and August?
We have been monitoring loads of warning indicators, from the dramatic improve in bearish momentum alerts to an preliminary sign from the Hindenburg Omen in late Could. However, regardless of these bearish implications, the power of mega-cap development shares, like Nvidia (NVDA) and Apple (AAPL), has been sufficient to drive the foremost fairness benchmarks increased. The query for traders is whether or not the power in these main development shares will probably be sufficient to maintain this bullish market development in place!
In the present day, we’ll lay out 4 potential outcomes for the Nasdaq 100. As I share every of those 4 future paths, I am going to describe the market situations that might doubtless be concerned, and I am going to additionally share my estimated chance for every situation.
By the best way, we performed the same train for the Nasdaq 100 again in February, and you will not consider which situation really performed out!
And bear in mind, the purpose of this train is threefold:
- Think about all 4 potential future paths for the index, take into consideration what would trigger every situation to unfold by way of the macro drivers, and evaluation what alerts/patterns/indicators would verify the situation.
- Determine which situation you are feeling is most probably, and why you suppose that is the case. Do not forget to drop me a remark and let me know your vote!
- Take into consideration how every of the 4 eventualities would influence your present portfolio. How would you handle threat in every case? How and when would you are taking motion to adapt to this new actuality?
Let’s begin with essentially the most optimistic situation, involving the QQQ pushing above $500 over the following six-to-eight weeks.
Choice 1: The Very Bullish Situation
Essentially the most optimistic situation would imply the Nasdaq 100 continues its unimaginable tempo, pushing properly above the $500 degree by the tip of July. Not solely would main development names proceed to thrive on this setting, however different shares that haven’t been collaborating – corresponding to Power and Industrials – would doubtless rotate increased as a broader advance propels the QQQ to additional new all-time highs.
Dave’s Vote: 10%
Choice 2: The Mildly Bullish Situation
What if the market stays elevated, however the tempo slows manner down? This second situation would imply that the Magnificent 7 shares would stall a bit, and maybe different shares would rotate increased. The main benchmarks would stay in a major uptrend, however we might be speaking about management rotation because the market stays in a “wait and see” mode about potential Fed price cuts later in 2024.
Dave’s vote: 25%
Choice 3: The Mildly Bearish Situation
Each of the bearish eventualities would contain a pullback in main development names, and if main names like NVDA start to retrace their beneficial properties from early 2024, we may face a mildly bearish situation. Breadth situations stay weak and, after the leaders begin to fail, there’s nowhere to go however decrease. In situation #3, I might count on the Could low round $443 to carry for the QQQ, and this begins to really feel like a well-deserved pullback whereas the first uptrend nonetheless stays in place.
Dave’s vote: 60%
Choice 4: The Tremendous Bearish Situation
You at all times have to have an excellent bearish end result, which helps to place the opposite three into correct perspective. In situation 4, the management shares give again their current beneficial properties, and maybe some robust financial knowledge brings the entire “Fed Goldilocks situation” into query. The QQQ drops under its Could low, and by late July we’re debating whether or not the April low will maintain. Whereas the foremost fairness benchmarks nonetheless have constructive returns in 2024, this corrective transfer forces even essentially the most optimistic of bulls to rethink their thesis.
Dave’s vote: 5%
What chances would you assign to every of those 4 eventualities? Take a look at the video under, after which drop a remark with which situation you choose and why!
RR#6,
Dave
P.S. Able to improve your funding course of? Take a look at my free behavioral investing course!
David Keller, CMT
Chief Market Strategist
StockCharts.com
Disclaimer: This weblog is for instructional functions solely and shouldn’t be construed as monetary recommendation. The concepts and methods ought to by no means be used with out first assessing your personal private and monetary scenario, or with out consulting a monetary skilled.
The creator doesn’t have a place in talked about securities on the time of publication. Any opinions expressed herein are solely these of the creator and don’t in any manner symbolize the views or opinions of every other particular person or entity.
David Keller, CMT is Chief Market Strategist at StockCharts.com, the place he helps traders reduce behavioral biases via technical evaluation. He’s a frequent host on StockCharts TV, and he relates mindfulness strategies to investor resolution making in his weblog, The Aware Investor.
David can be President and Chief Strategist at Sierra Alpha Analysis LLC, a boutique funding analysis agency centered on managing threat via market consciousness. He combines the strengths of technical evaluation, behavioral finance, and knowledge visualization to establish funding alternatives and enrich relationships between advisors and purchasers.
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