Baxia Markets
February 15, 2023

NASDAQ 100 reaching overbought conditions

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NASQAD 100 taking off

After the federal reserve meeting on Wednesday, and subsequent press conference, the NASDAQ 100 took off like it was fired out of a cannon on Wednesday. On Thursday, we are seeing more of the same action, but a little bit of caution may be needed going forward. After all, markets do not go up in a straight line forever.

nasdaq100 reaching overbought conditions(1)

Looking at the conditions of the NASDAQ 100 currently, the market is approaching a significant area of selling pressure just above as denoted by the blue rectangle on the chart. The moving averages, the 50-Day EMA in red, and the 200-Day EMA and black, are starting to cross but it must be recognized that the moving averages are very late after this very impulsive move. Another thing to keep in mind is that the Relative Strength Index just crossed over into the overbought condition, with a reading above 70.


As traders start to look towards next day’s session, it features the Non-Farm Payroll number. This is obviously a time that could cause a bit of volatility, so while the NASDAQ 100 certainly looks very bullish, at this point in time it might be a bit late to chase the trade. What the bullish traders will be hoping for is some type of pullback that gets bought into and has value hunters picking up “cheap contracts.” The epicenter of the selling pressure seems to be near the 12,750 level, and the market is currently around the 12,600 level.


A bit of profit-taking before the major jobs announcement would be expected, although it does not necessarily make this a sellable event. As far as a negative turn of events is concerned, the NASDAQ 100 would have to wipe out the massive candlestick from Wednesday and break below the bottom of it for bulls to suddenly become concerned. Caution is advised, but looking for value will more often than not pay off in an uptrend like this. Of other note is the fact that the market just broke out of a massive “W pattern”, which of course all the world can see.

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