Nasdaq – Examining Market Optimism Nasdaq – Examining Market Optimism

By: Alex Freidmen

  • Investors remain hopeful
  • Data not delivering
  • Double top forming in the Nasdaq?

Stock markets are modestly higher on Thursday, recovering some of Wednesday’s losses as investors seemingly struggle to determine where things stand.

There’s clearly a desperate desire to cling on to the optimism that enabled such a strong end to the year but unlike in that period, the data isn’t really playing ball. The releases we’ve seen so far this month have been fine and in the main, perfectly in keeping with the expectations people had coming into 2024. But is that enough?

Pricing on interest rates was very aggressive at the end of 2023 and perhaps the data needed to keep overdelivering to keep the party going. There’s still a sense that it could again which is why there’s seemingly so much reluctance to allow markets to correct in any significant way but at some point, the data needs to justify such loyalty or investors may start to worry that central banks won’t be swayed.

Assessing the Nasdaq’s Performance

The Nasdaq is once again trading around record highs but on this occasion, there doesn’t appear to be much momentum with it.

NASDAQ-Daily Chart

Source – OANDA

The index has run into resistance today at around 17,000, the same level it failed at in late December. It did so on this occasion with the stochastic and MACD not even close to registering new highs alongside price so even if it did reach a new high, it would have formed quite a significant divergence.

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Nasdaq’s Market Correction Signals

The Nasdaq Corrective Pattern: What Investors Need to Know

For Nasdaq investors, the recent volatility may have triggered a familiar sense of déjà vu. Market watchers are on high alert as the index ponders a potential double top formation. If the Nasdaq fails to hold firm above the neckline at 16,190, reminiscent of levels seen just a few weeks ago, it could spell a downward spiral into a corrective pattern.

Should this materialize, the Nasdaq may be destined for a bumpy ride, testing its resilience and raising skepticism about the sustainability of its recent bullish run. With echoes of a similar narrative in the backdrop of this market turmoil, it becomes imperative for investors to tread cautiously while the market figures out its next move.