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Market Insights

Nasdaq recovery runs out of steam

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The Nasdaq’s relentless rally looks to have finally run out of steam at a key technical area. Short squeezes were the narrative a couple of weeks ago but that story’s looking stale. Month and quarter-end flows are now done too. So what’s the next story? As we head into April/Q2, is this it for the Nasdaq recovery trade or are there other factors that could push the index higher?

The chart’s at a fascinating juncture and you can slice and dice it to make the case for either direction. Two main scenarios seem to be doing the rounds, which I’ll summarise here:

NASDAQ 100 price daily movement

Scenario 1 (chart above): “Bulls are in charge. The breach of 13,000 was a classic buy signal, broke out of the descending channel. Run into strong overhead levels for now but the path of least resistance is up.”

Nasdaq bearish chart

Scenario 2 (chart above): “Bears are in charge. 16770 was the top and this rally is just a pullback into the 100 & 200 day moving averages, with the horizontal resistance and golden fib (61.8%) retracement as confluence. The obvious path is lower”.

Quite polarising perspectives. Is this suggestive of a battle ahead? A more range-bound environment as bulls and bears battle it out but neither can really take the initiative?

There’s tech demand to consider too. Some analysts have been taking a more cautious view lately. Barclays analyst Blayne Curtis downgraded AMD from overweight to equal weight and lowered their price target to $115.

"We don’t have a smoking gun pointing to a correction underway in any of these markets, but it’s very clear to us that all 3 segments (gaming, PC and 'broad-based/XLNX') are running at elevated levels"

"The core issue here is what will be AMD’s growth trajectory coming out of this potential correction and the answer to this will be just how competitive Intel and ARM will be in 2024/25."


Apple & TSMC have both lowered their demand forecasts lately. Apple cut iPhone SE production by 20%, and TSMC have also noted slowing demand for items "such as smartphones, PCs, and TVs, especially in China, the biggest consumer market" too.

Price-tracking sites such as 3dCenter have also noted graphic card prices coming down, suggesting that the chip shortage might be easing.

None of these factors should be a huge surprise to anyone. The great unknown is whether companies have over-ordered and will now find themselves with excess inventory at a time of slowing demand (which all else equal, could lead to price cuts).

And demand for cloud services and software hasn’t shown signs of weakness either. Perhaps crucially, the trend towards remote work doesn’t seem to be ending.

HSBC cited data from Kastle systems (based on access pass scans for office buildings) that suggests US office attendance is only back to 40% of pre-pandemic levels, and struggling to go much higher. For comparison, leisure activities such as dining, air travel, or basketball spectators are back to around 90% of pre-pandemic levels.

Tech demand seems likely to stay with us, just as it has for the past two decades. But will it be enough to meet lofty expectations?

Not investment advice. Past performance does not guarantee or predict future performance.

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