A slump in once high-flying technology shares drove U.S. stocks crashing on the first day of the second quarter, giving investors a fist on their promising anticipation on the stock markets. The Nasdaq 100 index has been down over 2.2 percent to settle at 6389.3 on Monday, as President Trump’s criticism on Amazon.com and retaliatory tariffs effective on April 2 from China.
Yesterday’s tumble was mainly derived from tech’s deepening rout, whose stocks was leading the U.S. stocks into a bullish market for the past nine years. However, things had been changed since the scandal of data leakage on Facebook was revealed, which has been the biggest challenge it has ever had with losing its value by $75 billion.
Once negotiation between the world’s two biggest economies fails and the trade war starts, economists tend to revise down the anticipation of the economic growth, which may lead to slow Fed’s path to increase interest rates.
“The U.S. economy is showing a lot of symptoms of being late-cycle,” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman & Co. “I’m looking for a downturn in maybe late next year or early 2020, with the fiscal stimulus they’re getting from the White House giving us a little bit of late-cycle expansion, but nothing that changes the game plan.”
The broader outlook for the Nasdaq 100, if we look at the daily chart, remains in a bearish market especially when it broke out the 61.8% Fibo retracement level without turning back. The anticipated movement for the next few days may be heading downwards to seek some supports on Feb 9’s low at 6152.8.
Here combining with some indicators, we are able to find that a downward trend is leading the way in the Relative Strength Index (RSI) and MACD, which could make the index decrease further. Additionally once rallied Stochastic Oscillator seems to want to pull back again to oversold area. If it really happens, increased sell-off strength will lead index towards the session low.
Chart 1: NAS100 Daily
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