Since the bottoming of the market in March of last year, the Nasdaq has really enjoyed a fine time of it, with a trend firmly in place that will take more than a few nights of weakness to break.

I include the two-year chart for context as to just how punchy the dominant trend has been, and also to show the last couple of night’s price action in a broader content.

The green line is the exponential 200-day moving average, and what can clearly be seen on the chart is that moves below that level were quickly supported on the two previous occasions in September and November.

The break this time comes from a higher level and has already been deeper than the previous two, so the next few nights’ price action are going to tell us a lot about whether there is enough juice left in the trend for it to re-assert, or whether a deeper correction is to come.

Certainly, Powell did nothing to assist bonds last night, and a further ‘rinse’ will inevitably put further pressure on ‘growth’ stocks as yields climb further.

The more benign simple 200-day moving average sits around 11,700 at the moment, above which there should be some horizontal resistance turned support at 12,000 should we see a short term trading move to that level.

Technology stocks in Oz will continue to take their lead from what this index is doing in the States, hence the chat about the Nasdaq today.

It’s been growth over value for some time now, and these well serviced trends have a habit of making the first proper sell-down a violent one.

I won’t be surprised to see 12,000 in the short term, but with the TGA unwind also to play out in large part in March and April, the bounce as and when it comes may also be very dramatic.

There is obviously a multitude of ways you can trade the Nasdaq locally, inclusive of an index product that CitiWarrants makes available as a – you guessed it – warrant.

Steve Collette of Collette Capital Pty Ltd (ABN 56645766507) is a Corporate Authorised Representative (No. 1284431) of Sanlam Private Wealth (AFS License No. 337927), which only provides general advice.

Collette Capital only makes services available to professional and sophisticated investors as defined by the Corporations Act, Section (s)708(8)C and 761G(7)C.

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