Nasdaq 100: Break above 10400 to signal a technological bubble – Credit Suisse

The Nasdaq 100 bull trend remains seen as highly overextended following its move to and above its ‘typical’ extreme – 15% above the 200-day average – now at 9855. Although economists at Credit Suisse expect a consolidation phase to emerge, they also note the probability of a ‘bubble’ environment in the Tech sector.

Key quotes

“We remain of the view the market is highly overstretched and look for a consolidation/correction to emerge. Weakness though will be seen as a corrective mover lower and there remains a real possibility we may be in a ‘bubble’ environment.”

“Supports for a setback are seen at 9704 initially, then 9499/89, with a break below here now needed to set a (small) top. Support would then be seen at 9357 initially, ahead of 9182, before 8863.”

“A close above 10155/230 and then 10400 would suggest there is a real possibility the Tech sector is entering ‘bubble’ territory and further parabolic strength may emerge, with resistance seem at 10610/710 next.”

“96% of Nasdaq 100 stocks are above their medium-term average and whilst this points to strong market breadth, it also speaks further to the current highly overextended state of the rally. Furthermore, 74% of Nasdaq 100 stocks are above their long-term 200-day average.”