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The Nasdaq Composite Index currently comprises 2667 stocks which are listed on Nasdaq. Due to its large share of tech stocks, it is regarded as the world’s leading technology index. After the very marked price gains in few US mega techs and the strong start into the year 2021, the market has now seen the first take-profits. According to analysts at Commerzbank, it may take some time to eliminate the medium-term overbought situation. 

Key quotes

“From the medium-term technical perspective, the index – led by ‘Corona crisis winners’, e.g. from the sectors of e-commerce and mobile work – had entered a new technical bull market movement. In this, we first saw a ‘V’ recovery, which from May 2020 onwards directly gave way to a rise to new all-time highs. It was only in September 2020 that upward momentum slowed. 

“From the short-term technical perspective, a new uptrend became established starting from the interim low at 10831 points in November 2020. “This uptrend led the Nasdaq Composite, without a notable consolidation pause, to new all-time highs at 13729 points by 25 January 2021. Since then, the Nasdaq Composite has been losing short-term upward momentum. It has recently slipped below the 10-day moving average with a trading take-profit signal, and so the uptrend since November 2020 is being tested.” 

“The elimination of the medium-term overbought technical situation should have begun. A trading market below the all-time highs at 13729 points should be no surprise. Since with regard to 2021 the Nasdaq Composite Index should struggle to revisit its strong upward momentum (in 2019: +35%; in 2020: +44%), we maintain, for the time being, our technical price target (from Q4 2020) of 14000 points for the year 2021.”