Nasdaq Suffers Second Straight Week of Losses, Breaks Key Support Level As Tech Bears Return: Is This Time Different?

The Nasdaq 100 Index finds itself in a rare bind as it stares down a second consecutive week of losses and hovers at the lowest level in a month.

This troubling downturn, an unexpected twist in the 2023 tale, sent ripples of concern through the markets, with investors now fearing that a trend shift might be underway.

After the year-to-date gains had hit 40% by early August, the elite club of U.S.’s 100 tech champions has fallen by nearly 5% over the past two weeks, a feat unseen since December 2022. Over the past nine sessions, the Nasdaq 100 has witnessed seven negative closes.

The tech-heavy index, closely followed by Invesco QQQ Trust ETF QQQ, no longer offers compelling valuations, giving a compelling stage for the bears to make a remarkable comeback. The average Nasdaq 100 stock is now trading at 27 times its anticipated earnings for the upcoming year.

Technicals, Once Proud Bullish Factors, Now Look Vulnerable

Chart: Nasdaq 100 Falls Below Key 50-Day Moving Average

If sentiment and fundamentals have recently shown some difficulties, technicals do not inspire confidence either.

What vigilant traders tracking technical analysis signals would surely have noticed is that the Nasdaq has broken down below the 50-day moving average support this week.

This marks the first break of the support since mid-March 2023 when the tech index briefly dipped below this significant threshold.

When the Nasdaq 100 broke below the 50-day moving average this year, it sent a false bearish signal, providing traders with a golden opportunity to buy the dip.

Will this narrative repeat itself this time around?

Nasdaq 100’s Stocks Movers In August

The worst-performing stocks in the Nasdaq 100 since the beginning of August have been Datadog, Inc. DDOG and Fortinet Inc. FTNT, both down 23% month to date, followed by PayPal Holdings Inc. PYPL, down 19%.

The highest gains have been recorded by Amgen Inc. AMGN, up 12%, and Constellation Energy Corp. CEG which has risen by 10%.