As Wall Street continues to break new records in October, a concerning trend has emerged that is raising eyebrows among investors. The Nasdaq 100, a tech-heavy index, has notably been absent from the list of index hitting record highs since July. This anomaly has not gone unnoticed by quantitative and technical strategist Javed Mirza at Raymond James.
Mirza’s observations suggest that the lack of new highs for the Nasdaq 100 may signify a broader shift in the market, potentially signaling the onset of a new phase and approaching a peak in the current bull market. The implications of this could be significant for Portfolio Managers who may be shifting away from growth-oriented sectors towards more conservative investments.
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The Nasdaq 100 Performance
- The Nasdaq 100 has failed to reclaim the highs it saw in July, currently trading around 2% below its record close.
- Technical indicators indicate that a new short-term ‘mechanical sell’ signal has been activated, setting it apart from other North American equity indices.
- Factors Pointing Towards Market Shift
- The Cboe Volatility Index (VIX) is showing higher lows, indicating increasing market volatility.
- The Canadian TSX Composite is outperforming the S & P 500, suggesting a tilt towards different markets.
- WTI crude oil prices surpassing $94 per barrel could further impact market dynamics.
While these indicators may signal a transition to the late stages of the bull market cycle, Mirza notes that market conditions can surprise and linger at these stages for an extended period. He remains cautiously optimistic, stating that the "path of least resistance" still leans towards higher stock prices leading into 2025.
In conclusion, the absence of the Nasdaq 100 from the list of record highs hints at a potential market shift that investors should be wary of. As indicators suggest a change in the market dynamics, staying informed and adaptable to evolving market conditions will be crucial for navigating the uncertain waters ahead.
