In anticipation of the new year 2023, the Nasdaq index has moved to the 10,700 level for the 3rd time in the last 3 months. Except for the short-term breakout of that level on October 13, it was the 10,700 mark in 2022 that was the low point for the Nasdaq Index. Will prices be able to bounce up again, or will January start with a renewal of lows in the last 2 and a half years?
For the high-tech Nasdaq, as well as the wide market index S&P 500, this year passed under the sign of a steady downtrend. Geopolitical conflicts, the energy crisis, slowing of economic growth and a sharp increase in interest rates around the world have left no chance to grow for most stocks.
Although by the end of the year some of the problems began to disappear from the agenda (at least in the U.S.), there is no great desire to buy stocks of companies from the IT-sector. Seeing the inevitability of losses by the end of the year, many investment companies prefer to fix a negative result, because it will be easier to show growth in 2023 from the low base of the current period.
Of course, there is no guarantee that next year will be significantly better than the current one, but many investors are slowly forming their long-term positions in shares of the IT-sector, especially considering the level of their decline. The same Tesla stocks, which have dropped from their all-time highs by 70%, can show strong percentage growth in 2023 just by the fact of the current low price, especially if the problems with production and sales in China are solved.
If the Nasdaq manages to stay above 10700, there is a chance of a bounce up to at least 11200. For better reliability it is worth to wait for at least one session of steady growth, because in case of fixing a breakdown at 10700 downward, the movement targets to 10350 and to the pre-pandemic high at 9800 will be relevant.
The following trading strategy option can be suggested:
Buy Nasdaq in case of a rebound up from the 10700 level. Take profit – 11200. Stop loss – 10350.
Also, traders may use Trailing stop instead of a fixed Stop loss at their convenience.