This article is written exclusively for Investing.com
The focus remains on technology stocks today after all the gains made in the wake of Wednesday's policy decision have been surrendered. Investors are concerned that policy tightening from the Fed and other central banks will increase the appeal of value stocks and weigh on demand for lower-yielding growth stocks, especially those overvalued. in the industry through insider sales, with Elon Musk recently dumping some of his Tesla (NASDAQ:) stock.
In fact, the NASDAQ has not gone anywhere in the past month and a half. The tech-heavy index traded sideways with wide swings in both directions. The large swings may be a sign of investor nervousness. After soaring so much in recent years and in light of the Fed tightening, a small correction shouldn't come as a big surprise.
It is therefore possible that we have at least seen a short-term top, especially in light of Thursday's price action reversal, as you can see from the chart:
The index test now the main support around 15,700, an area where the index previously found resistance in late August and early September. A daily closing break down here could pave the way for a bigger drop. If that happens, we might see the bears push the index down toward the bullish trendline in effect since November last year, or even the 200-day moving average, which hasn't been tested since it came just after the level rose again from the pandemic in April 2020. So a correction is overdue anyway. While the near-term technical outlook may appear somewhat bearish, it is important to note that the NASDAQ is still in an uptrend, so the recent struggles should be taken with a grain of salt. The long-term trend may remain intact for a while, even if we see a correction.
So I'm not mentioning the top here, in case you were wondering. I only emphasized the potential for a correction.
