The tech-heavy Nasdaq 100 index attempted to steady itself at the start of the week, following its most severe single-day decline in three weeks. Early buying interest quickly faded, however, as profit-taking eroded the session’s initial gains. Investors are now grappling with a pivotal question: was Friday’s slide merely a healthy market correction, or does it signal the start of a more significant sector rotation?
Economic Data in the Spotlight
Market caution is expected to persist until fresh economic indicators provide clearer direction. All eyes are now on tomorrow’s release of key November data, including the jobs report and retail sales figures. These metrics will be scrutinized for evidence justifying the Federal Reserve’s recent interest rate cut and for insights into the underlying strength of the U.S. economy. Participants continue to digest the implications of that Fed move, shifting their focus increasingly toward real economic performance.
A Tentative and Fragile Recovery
Monday’s trading reflected a hesitant calm after recent anxieties over a potential overheating in the artificial intelligence sector. The index opened with an upward gap, supported by positive cues from European markets and a decline in bond yields. This momentum proved unsustainable. The morning saw renewed selling pressure among major technology constituents, while trading volume remained below average. This subdued activity suggests large institutional players are adopting a wait-and-see approach rather than engaging in aggressive accumulation.
Index Reshuffle Sparks Individual Stock Volatility
A significant driver for specific equities is the forthcoming reconstitution of the Nasdaq 100, effective December 22. Western Digital (+1.7%) and Seagate Technology (+2.0%) both advanced, benefiting from their imminent inclusion in the benchmark. Investors are interpreting this move as an endorsement of their AI-driven growth strategies.
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A notable outlier is Lululemon Athletica. Despite being slated for removal from the prestigious index, its shares surged over 9%. Market observers attribute this jump to a classic short squeeze following solid quarterly results, which forced bearish traders to cover their positions.
Technical Picture and Underperformers
From a technical perspective, the index is navigating a critical juncture. The recent pullback brought it directly to its 50-day moving average, which currently serves as a crucial support level. A successful defense of this level by bullish investors could pave the way for a resumption of the longer-term uptrend. The Relative Strength Index (RSI) has now retreated from overbought territory into a neutral zone, theoretically allowing room for recovery.
While Tesla (+2.7%) attracted buyers after a period of consolidation, other heavyweight components remained under pressure. Broadcom extended its decline from Friday, losing another 2.5% amid lingering concerns over its margin trajectory. Oracle also failed to arrest its downward trend following its recent earnings report.
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