Is The Nasdaq Set For A Bounce?

Is The Nasdaq Set For A Bounce?

The Nasdaq 100 index (which houses the stock and share prices of blue-chip technology companies) is currently experiencing its worst quarter for a decade. Over the last two months, the tech index has shown a loss of 12%. It’s rare for any index to plummet this dramatically so quickly.

However, not everyone believes the situation is a disaster. Trading analyst, Todd Gordon, believes that “the market is set for a bit of a relief rally” and that Nasdaq stocks will bounce back very soon.

Trade War Easing?

Nasdaq stocks originally started to fall as a result of the trade war between the US and China. Both nations have the power to impose sanctions that could impact tech companies, both directly and indirectly. Naturally, this lead to a sell-off of stocks that drove prices down even further. But why does Todd Gordon believe that this situation might be short-lived?

The answer lies in the fact that each round of sell-offs has been less significant than the one preceding it. As Gordon told the news outlet CNBC, “momentum as measure by RSI, which is the relative strength index, has actually been decreasing on each push to new lows”. In other words, traders are losing interest in selling off their stocks. This suggests that, fairly soon, there will be a wave of demand for Nasdaq stocks, driving prices back up.

Quality Stocks

It’s easy to see why Todd Gordon is likely to be correct. Nasdaq includes highly prestigious stocks, such as Facebook, Microsoft, Apple and Netflix. These companies are fundamentally sound and very profitable. It would be very surprising if demand for their stocks and shares didn’t reassert itself. What’s more, the lower share-prices will almost certainly attract fresh investors, who will be drawn by the opportunity to profit on high-profile companies.

If you’re looking to invest in blue-chip tech stocks, now might be your best opportunity. With technical indicators suggesting a bounce, and trade war tension beginning to ease, there may be light at the end of the tunnel for the Nasdaq.