Nasdaq 100 Forecast: Can Stocks Keep Rising Despite Hotter CPI?

It’s been a wild ride for the stock market lately. Even with every reason for a pullback—hot inflation data, rising bond yields, and global uncertainties—the S&P 500 is nearing record highs. So, what about the Nasdaq 100 forecast? Can it follow the same path or will it start breaking lower amid a growing list of bearish macro factors.

Markets extend rise despite hotter inflation data

The CPI report earlier showed inflation slightly higher than expected, but stocks didn’t falter. This leaves many traders scratching their heads, wondering what could actually cause this rally to stumble. With the 10-year bond yields climbing past 4%, and the Fed cutting rates, the market is defying expectations. Is this really a “Fed pivot,” or just a temporary response to inflation concerns? Whatever it is, something doesn’t seem quite right.

The September CPI report showed inflation at 2.4% year-over-year, slightly higher than the expected 2.3%. The core CPI also edged up to 3.3%. While these numbers are higher, they’re not alarmingly so. However, if inflation starts to pick up again in the coming months, it could trigger more concerns from the Federal Reserve—and the markets.

Much of this hinges on oil prices and tensions in the Middle East, with recent talks of an Israeli attack on Iran’s oil facilities. If oil prices spike and stay elevated, inflation could follow. For now, though, the Fed seems committed to slowly cutting rates, despite these inflationary pressures.

From a trading point of view, it’s probably not time to start shorting the market just yet. While caution is always wise, especially after such a strong run, we don’t have a clear bearish signal at the moment. The Nasdaq 100 is already up about 18% from its August low and 11% from its September low. Bulls should stay vigilant, tightening stop losses and watching for any potential shifts in the trend.

So, Why Are Markets Still Going Up?

With everything going on—stronger-than-expected inflation, global conflicts, recession fears, and a shaky Chinese economy—it’s almost surprising that US stocks keep climbing. Let’s not forget about the looming US presidential election which typically increases market volatility. The S&P 500 is up over 22% this year, nearing a $50 trillion market cap. Even a dip caused by the yen carry trade unwinding was quickly bought up.

What’s fuelling this resilience? One theory is the government’s record deficit spending, which may be helping to prop up the stock market. But whether this trend can continue is anyone’s guess. Until we see a clear bearish pattern in the charts, it’s best not to bet against the rally. Trying to time a drop could prove costly.

Nasdaq 100 forecast: Technical Analysis and Trade Ideas

Source: TradingView.com

From a technical standpoint, the Nasdaq 100 remains in a bullish trend. Since bottoming out in August, the index has been making higher highs and higher lows, reclaiming the 21-day exponential moving average. It has also broken several resistance levels, which have since turned into support, keeping the path of least resistance to the upside.

For now, the key support level for bulls is around 20,000, a former resistance level that was recently broken. If the Nasdaq 100 can push past the next resistance zone between 20,315 and 20,395, we could see the index heading toward the July high of 20,759.

However, traders should remain cautious and be on the lookout for any potential reversal. If the 20,000 support level fails, the index could drop to test the range between 19,635 and 19,715. This range is critical—if it breaks, the Nasdaq 100 could see a deeper correction, possibly down to the 200-day moving average.

Bottom Line

While the technical Nasdaq 100 forecast has not turned bearish yet, with the index remaining in a strong uptrend, caution is still warranted. Markets are defying expectations, and while there’s no immediate reason to bet against this rally, tightening stop losses and monitoring the charts is essential. If key support levels start to break, a deeper correction could be on the horizon. For now, though, the bulls remain in control.

-- Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R