Nasdaq, Tech Stocks Coming Out Of Correction: Here’s What Recent Market History Says About Rebound Lasting
September has been a volatile month for the Nasdaq Composite Index. After hitting an all-time high on September 2, crossing above 12,000 for the first time ever, the Nasdaq dropped by over 9% within a week and entered a technical correction.
No surprise: the selloff in the tech-heavy stock market index was led by some of the biggest names in tech. The Technology Select Sector SPDR, also known as XLK and which tracks the stock market’s leading sector, also had recent losses greater than 10%.
But this week, the Nasdaq, and some of the hottest technology stocks that have led the recent bull market, like Apple and Tesla, are bouncing back.
Tesla shares jumped more than 4% during premarket trading on Tuesday, building on a big Monday, which saw the stock pop more than 12%. That’s after a drop of more than 20% last Tuesday, Tesla’s worst day on record. Mega-cap tech stocks including Amazon, Microsoft, Facebook and Alphabet all rose over 1% early, and Apple’s pre-market gains were even stronger ahead of its virtual new product launch event.
The Nasdaq index rose by over 1%, continuing its bounce back from its worst week since March. The Dow Jones Industrial Average, meanwhile, rose by 200 points, building on the 1.2% gain from Monday. The Nasdaq-100 broke a two-day losing streak. Monday’s broad market rally was built on optimism about a coronavirus vaccine, but the past ten trading days have been a roller coaster for investors: the Dow, for example, has been down as often as it has been up.
On the technical front, the RSI is at 43.27% and suggests that the market can move in an upward direction. The current price is trading below the 20 & 50 day moving averages and above 5 day moving averages. The stochastic is forming a parallelside crossover.
Overall Bias is positive and Short-term buy trades can be initiated with below mentioned Stop Loss and Profit targets.
Trade Suggestion – BUY Microsoft Share at 205.05 Take Profit at 210.13 Stop Loss at 199.40