The NASDAQ 100 has been on a relentless bullish run, reaching record highs. However, recent price action suggests a potential slowdown, raising concerns about whether the index has topped and if a reversal is imminent. This article evaluates the NASDAQ 100 from a fundamental, sentiment, and technical perspective to determine its next move.

Fundamental Analysis

Fundamentals play a crucial role in assessing whether the NASDAQ 100 has peaked. The following key economic factors provide insight:

1. Monetary Policy and Inflation

• The Federal Reserve has maintained a hawkish stance, with policymakers suggesting that interest rates may remain higher for longer.
• Core inflation remains sticky, limiting the Fed’s ability to ease policy in the near term.
• Higher rates generally weigh on tech stocks, which are highly sensitive to interest rate expectations.

2. Growth and Economic Data

• Recent GDP growth data suggests resilience in the U.S. economy, but signs of a slowdown are emerging.
• Corporate earnings have been mixed, with some tech giants warning of weaker growth ahead.
• Manufacturing and services PMIs indicate a softening outlook, which could impact broader market sentiment.

3. Labour Market and Consumer Spending

• The labour market remains strong, but job growth is decelerating.
• Consumer confidence is starting to decline, which could impact corporate revenues, particularly in the discretionary tech sector.

4. Trade and External Balance

• Geopolitical tensions and trade restrictions on semiconductor exports have created uncertainty in the tech sector.
• The global demand for chips and AI-related services has been robust, but any slowdown in China’s economy could negatively impact U.S. tech stocks.

5. Fiscal Policy and Business Activity

• Government spending remains supportive, but debt concerns could lead to future spending cuts.
• Business investment in tech remains strong, but valuations appear stretched.

Fundamental Verdict: The macroeconomic landscape suggests limited upside potential unless the Fed signals an easing cycle. If growth weakens and rates stay elevated, downside risks increase.

Sentiment Analysis

1. Market Positioning (Commitments of Traders – COT Data)

• The latest COT report indicates that hedge funds and institutional investors have started reducing long positions in tech stocks.
• Retail traders remain overly bullish, which can often be a contrarian signal.

2. Fear & Greed Index

• The market is currently in a greed phase, suggesting that a correction may be on the horizon.
• A high level of euphoria often precedes market tops.

3. Earnings Sentiment

• Despite strong earnings from a few tech leaders, forward guidance has been cautious.
• The AI-driven rally appears overextended, with some analysts calling it a bubble.

Sentiment Verdict: Sentiment is overly optimistic, which increases the likelihood of a pullback.

Technical Analysis

Ichimoku Cloud Analysis

• The price is well above the Kumo (Cloud), confirming a long-term uptrend.
• However, the latest monthly candlestick shows a sharp rejection from the highs, hinting at weakening bullish momentum.
• Conversion Line (Tenkan-Sen) and Base Line (Kijun-Sen) are far apart, indicating an overextended move.
• Chikou Span (Lagging Span) is still above price, confirming long-term bullishness, but any move below the cloud would signal a major trend reversal.
• Link To Price Chart.

RSI and MACD Analysis

• RSI is at 58.49, down from overbought levels, indicating momentum is cooling off.
• MACD histogram is negative (-2.7), and a potential bearish crossover may confirm a trend shift.
• A lower high on RSI suggests weakening bullish strength, increasing the probability of a trend reversal.

Volume Analysis

• Declining volume on recent rallies suggests distribution, a sign that institutional investors may be offloading positions.
• Higher volume on red candles implies selling pressure is building.

Technical Verdict: The chart suggests that while the uptrend remains intact, momentum is fading. A break below 18,342 (Leading Span A) would confirm a deeper pullback.

Conclusion: Has the NASDAQ 100 Topped?

While the NASDAQ 100 remains in an uptrend, a combination of fundamental headwinds, extreme bullish sentiment, and weakening technical momentum suggests that the index is at risk of a major correction.

Key Levels to Watch:

• Immediate resistance: 19,730
• Key support: 18,342 (Ichimoku Leading Span A)
• Critical breakdown level: 16,954 (Base Line)

A sustained move below 18,342 would confirm a trend reversal, potentially leading to a retest of 16,954 in the coming months. Traders should exercise caution and watch for further bearish confirmation signals before taking action.

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