Fundamental, Sentiment, and Technical Analysis of the US100: A Comprehensive Overview

Introduction
The US100, representing the Nasdaq-100 index, has been a key focal point for market participants, with its performance heavily driven by the technology sector. As of January 20, 2025, the Nasdaq-100 has demonstrated impressive upward movement, but several fundamental, sentiment-based, and technical factors continue to influence its future trajectory. This article will provide a comprehensive analysis of the US100, incorporating fundamental, sentiment, and technical perspectives to offer a clear picture of its current market outlook.
Fundamental Analysis
Market Performance
The Nasdaq-100 has experienced substantial growth, recently surpassing the 21,500 mark. This surge is largely attributed to strong performance from major technology stocks such as Apple, Nvidia, Alphabet, and Tesla. These companies have been at the forefront of innovations, particularly in the field of artificial intelligence (AI), which has driven optimism across the broader tech sector.
Additionally, the market rally is supported by the anticipation of Federal Reserve interest rate cuts in the coming quarters. With inflation beginning to show signs of easing, investors are hopeful that a more accommodative monetary policy will stimulate further growth in the technology sector. This optimism has bolstered the Nasdaq-100’s position, as investors favour technology stocks with strong growth potential in a low-interest-rate environment.
Valuation Concerns
Despite the Nasdaq-100’s strong performance, concerns about rising valuations linger. The index’s reliance on megacap stocks such as Apple, Microsoft, and Tesla has made it increasingly vulnerable to fluctuations in their prices. These stocks now account for a larger portion of the Nasdaq-100 than in 2020, raising questions about the overall diversification of the index.
However, the Nasdaq-100’s valuation remains significantly lower than during the dot-com bubble in 2000, providing some level of reassurance. Still, this concentration in a few large companies means that any pullback in their prices could lead to a sharp decline in the index, affecting investor sentiment.
Sentiment Analysis
Investor Sentiment
Investor sentiment towards the Nasdaq-100 remains cautiously optimistic. On the one hand, the continued growth in the technology sector, particularly driven by AI advancements, has kept investors excited. On the other hand, there are concerns about the overvaluation of tech stocks and the concentration risk within the index.
Some contrarian investors have raised alarms about a potential tech bubble, pointing to the rapid price increases in a select group of technology stocks. The concentration of market capitalisation in these few stocks has made the Nasdaq-100 highly sensitive to their performance. If any of these companies falter, it could lead to a broader market correction.
Market Dynamics
Positive sentiment is also supported by the expectation of interest rate cuts from the Federal Reserve. With inflation appearing to moderate, the central bank is expected to adopt a more dovish stance, which could benefit technology stocks that have been impacted by higher borrowing costs.
Furthermore, there is an ongoing buzz around the role of AI in driving future growth. As more companies invest in AI technologies, the market sentiment remains largely positive, with tech companies positioned to capitalise on this trend. However, the vulnerability of the Nasdaq-100 due to its heavy weighting in a few stocks suggests that the index may experience significant volatility in the near future.
Technical Analysis
Price Action
As of January 20, 2025, the price of the US100 is trading at 21,569, showing a gain of 0.63% for the day. The recent price action highlights bullish momentum, as the price is currently above both the 9-day SMA (21,109.4) and the 25-day SMA (21,318.1), signaling a positive short- to medium-term trend.
Moving Averages
- 9-day SMA (green line): The 9-day moving average is trending upwards, reinforcing the short-term bullish sentiment.
- 25-day SMA (red line): The 25-day moving average is also sloping upwards, confirming that the index is experiencing bullish momentum over the medium term. The gap between the 9-day and 25-day SMAs suggests that there could be further upside as long as the price remains above these levels.
Volume
Volume is reported at 118.74K, indicating steady market participation during the current bullish phase. The volume spikes seen alongside upward price movement are positive, confirming the strength behind the bullish move. Strong buying activity supports the continuation of this trend.
Relative Strength Index (RSI)
The RSI currently stands at 56.97, which is above the neutral 50 level, suggesting that the market is in a moderate bullish phase. Importantly, it is not in overbought territory, so there is still potential for further upside before the market enters an overextended condition.
MACD (Moving Average Convergence Divergence)
- The MACD line (18.0) is currently above the signal line (4.8), indicating that momentum is on the side of the bulls.
- The MACD histogram is also positive and increasing, showing that the bullish momentum is strengthening. This is a solid confirmation of the ongoing upward movement in the US100.
Key Levels
- Support: The 25-day SMA at 21,318.1 serves as a key support level. If the price were to pull back, this area could act as a buying opportunity.
- Resistance: The immediate resistance lies near the 21,600-21,700 range. A breakout above this range could set the stage for a move towards the 22,000 psychological resistance level.
Conclusion
The US100 (Nasdaq-100) is currently in a bullish trend, driven by strong performance from major technology stocks, the promise of artificial intelligence advancements, and the anticipation of Federal Reserve rate cuts. Fundamental analysis suggests that the index will continue to benefit from growth in the technology sector, but concerns about overvaluation and market concentration remain.
Sentiment is cautiously optimistic, with investors confident in the sector’s potential but mindful of risks associated with the index’s heavy reliance on a few megacap stocks.
From a technical analysis standpoint, the US100 remains firmly bullish. The price is above key moving averages, volume is supportive, and both the RSI and MACD confirm the bullish momentum. As long as the price stays above key support levels, further upside remains likely.
Investors should continue to monitor both the fundamental and technical factors for further signs of trend continuation or potential corrections. Given the solid support from all angles, the outlook for the US100 remains positive, although vigilance is necessary as any pullbacks or shifts in sentiment could impact the performance of the index.
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