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Nasdaq 100 Technical Outlook: Bearish move materialised; how low can it go?
- The three-month sell-off in the Nasdaq 100 has lowered its valuation to a “cheaper level”.
- Momentum factors and sector rotation analysis suggest that further potential downside prevails in the Nasdaq 100 despite a “cheaper” valuation.
- Watch the key 19,125 potential downside trigger level on the Nasdaq 100.
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This is a follow-up analysis of our prior report, “Nasdaq 100 Technical Outlook: Corrective rebound before new potential down move” dated 21 March 2025.
Since our last analysis report, the price actions of the Nasdaq 100 CFD index (a proxy of the Nasdaq 100 E-mini futures) have managed to stage a rebound of 3% before it stalled right at the 20,340/790 key medium-term pivotal resistance and 200-day moving as expected (printed an intraday high of 20,363 on 26 Mar).
Thereafter, it plummeted by 8.2% to print an intraday low of 18,818 on Monday, 31 March, and ended the 1stquarter of 2025 with a loss of 8.6%, its first quarterly loss since July 2023.
Cheaper valuation after three-month sell-off
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Fig 1: Nasdaq 100 12-month forward price-to-earnings ratio with 200-day drawdown as of 31 Mar 2025 (Source: MacroMicro, click to enlarge chart)
This latest round of weakness seen in the Nasdaq 100 since the start of 2025 has led its valuation to dip to a “cheaper level”. Its 12-month forward price-to-earnings ratio has declined to 23.43 from a high of 31.02 printed in January 2024 (see Fig 1).
In addition, its 200-day drawdown from its recent peak has reached a level of -13.06 on 31 March, where such a level in the past has led to medium-term recoveries in the Nasdaq 100. Thus, has the recent three-month decline seen in the Nasdaq 100 CFD index hit an inflection zone that may trigger a medium-term bullish reversal as US President Trump’s “Liberation Day” announcement of reciprocal trade tariffs against “all countries” looms on Wednesday, 2 April?
Major underperformance of the US consumer discretionary against consumer staples
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Fig 2: Relative strength of S&P Consumer Discretionary/Consumer Staples with Nasdaq 100 as of 1 Apr 2025 (Source: TradingView, click to enlarge chart)
Based on sector rotation analysis, the latest observations seen on the relative performance of the US S&P Consumer Discretionary sector (cyclical) and Consumer Staples sector (defensives) suggest that the ongoing weakness on the Nasdaq 100 may not have ended.
Both the equal and market cap-weighted ratios of the US S&P Consumer Discretionary against Consumer Staples sectors exchange-traded funds have reversed down and broken below their respective 200-day moving averages. Currently, both ratios are challenging their respective major ascending trendline supports (see Fig 2).
A break below these major trendline supports may trigger significant multi-month corrective decline sequences, where similar past occurrences on the week of 2 March 2020 and 18 January 2022 led to losses of 24% and 28% respectively on the Nasdaq 100.
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Impending MACD bearish crossover condition in Nasdaq 100
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Fig 3: Nasdaq 100 CFD major & medium-term trends as of 1 Apr 2025 (Source: TradingView, click to enlarge chart)
The daily MACD trend indicator of the Nasdaq 100 CFD index (a proxy of the Nasdaq 100 E-mini futures) has flashed out an impending bearish crossover condition below its centreline, which suggests that the medium-term downtrend phase in place since its current 18 February 2025 all-time high remains intact.
A break with a daily close below the 19,125 key intermediate support may trigger another round of potential impulsive down move sequence to expose the following medium-term supports at 18,310, and 17,300/250 (see Fig 3)
However, a clearance above 20,340/790 key medium-term pivotal resistance zone invalidates the bearish scenario for the next medium-term resistances to come in at 21,440, and 22,470/980.
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