Nasdaq 100 (.NDX) News and Analysis

• SVB sale to First Citizens ushers in an eerily calm to the start of the week
• Nasdaq 100 technical considerations and levels to watch: ‘W formation
• With markets anticipating rate cuts from the Fed, big tech finds room to over perform on a relative basis
• The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library

SVB Sale to First Citizens Sets the Tone for the Week

Ahead of the European session news broke of Silicon Valley Bank’s (SVB) sale to First Citizens Bancshares, one of the most prominent regional banks in the US, after weeks with few suitors. The Federal Deposit Insurance Corp (FDIC) confirmed that all of SVB’s deposits, loads and branches will continue under new ownership.

The deal appears to have helped calm fears in the banking sector on Monday where more positive news surfaced as Deutsche Bank clawed back some of Friday’s losses. Despite a largely successful restructuring and encouraging profit figures, investors flew to safety as Deutsche Bank’s credit default swaps (insurance against a default) soared. In the current environment, it appears the market is content to sell now and ask questions later as the potential for panic reactions continues.

No early jitters for US banks at the open

Source: TradingView, prepared by Richard Snow

Nasdaq 100 Technical Considerations: ‘W’ Pattern Suggests Bullish Impetus

The Nasdaq 100 has put in a strong series of candles to move higher and now tests the yearly high set in February. In fact, price action reveals a ‘W’ formation, which is usually an indication of a bullish reversal. The pattern typically provides the strongest signal when appearing at new lows, however, the failure to extend the sell-off and subsequent rise still provides a meaningful indication of bullish intent.

The index failed to prolong selling below the 200-day simple moving average (SMA) at the second time of asking and proceeded higher thereafter. 12,950 appears as the immediate level of resistance with the psychological 13,000 level thereafter and 13,750 some way away still. Support appears via the 12,250 level with the 200 day SMA and the double bottom linked to the ‘w’ formation, thereafter.

Nasdaq 100 revealing a ‘W’ pattern as it attempts to make a fresh yearly high

Source: TradingView, prepared by Richard Snow

While most of 2022 saw the Nasdaq underperform the more representative Dow Jones Industrial Average, recent price action indicates that the tech heavy Nasdaq is making great strides as the Fed down shifts to a more neutral/dovish trajectory. Markets continue to downplay the possibility of more hikes from the Fed and instead, price in around 75 basis points of cuts before year end. The prospect of rate cuts flatters tech stock valuations and despite there being no resolution to the banking woes just yet, big tech stocks are finding some room to move higher.

The chart below indicates the relative performance of the Nasdaq vs the dow:

Nasdaq/Dow Jones Industrial Average (NDX/DJI) Provides an Indication of non-financial firm performance

Source: TradingView, prepared by Richard Snow

— Written by Richard Snow for DailyFX.com

Contact and follow Richard on Twitter: @RichardSnowFX