Technical Analysis On The NASDAQ 100 For Investors

The NASDAQ 100 made new highs again, almost daily in the last week. The top 10 companies by market cap make up 50% of the NASDAQ 100. This includes Nvidia, Microsoft, Alphabet, Apple, Amazon.com and Meta Platforms.

If you subtract these stocks from the NASDAQ 100, it would be barely positive year-to-date versus the current gains of 22% gains posted in 2024.

While investors are enjoying these gains, it does bring up additional risks that must be taken into account.

From a technical analysis there are a few signals that investors want to be aware of. First, the daily RSI is putting in a negative divergence over the last month. This can sometimes signal a drop coming. In addition, the NASDAQ 100 just tagged a top channel trend line. See the chart above. Lastly, short interest in the NASDAQ 100 is near historic lows. Lack of short interest means that most bears have capitulated which usually happens at a market top.

While all investors can do is watch the price action, these are signals that may trigger a near-term pull back in the index.