Nasdaq Approaching ATH With Overbought Technical Condition Alert 🥳
I wanna break free!!!
⚠️ Looking at QQQ swing calls above 392 on Tuesday into mid Dec for Santa rally gameplay. NVDA earnings will give it a push if deems positive so it’s really a bet with what you can afford to lose. Otherwise, look for dip buy around 385, if we get there again.
The NASDAQ 100 Index is closing in on its November 2021 all-time high of 16,764, just 4.5% away. The tech-heavy index’s year-to-date gains have reached 47%.
RSI on the high
However, technical indicators like the widely-followed Relative Strength Index (RSI) momentum oscillator, has climbed above the key threshold of 70, a clear signal that the market has entered overbought territory.
This condition typically indicates a period where bullish sentiment and buying pressure have been exceptionally strong. However, it’s also a cautionary note for investors, as such heightened levels often precede a potential market consolidation or pullback
The last time the Nasdaq 100 Index entered an RSI overbought territory was on July 13, with the tech index further surging by 2.5% to the July 19 high of 15,932 and then stopping its rally.
Time to chill
The soft-landing narrative is gathering pace, with equities rallying as Treasuries hold onto this month’s strong gains. As the yield curve further inverts, the stock market continues to not merely defy the fixed-income market’s classic recession warning but even welcome it. November’s surge across assets has come as the discount 10-year yields offer over those on 2-year notes widened rapidly to 50 basis points, after reaching 11 basis points in late October.
Admittedly, a flip from a discount to a premium is normally a dangerous sign for stocks because it has traditionally meant a recession has probably already started (with the Federal Reserve cutting rates and driving down 2-year yields). On that basis, the gains in stocks make some short-term sense.
But the dynamic also underlines the medium-term dangers for equities amid concerns a US slowdown is coming. Bond investors accepting lower yields on longer-dated debt underscores their expectations that a severe recession remains in play, even as stocks power toward fresh highs.
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Don’t be fooled by futures. Buy buy buy! Future so bright you are gonna need shades.
Is there a pullback coming soon?
Can we get a 5% pullback today?