Nasdaq 100: Wall Street will need to confirm its recovery

The risk/reward ratio is back in favor of short-term purchases

In fact, several technical indicators suggest that the market was oversold at the end of last week. The RSI momentum indicator dipped into its oversold zone, while the percentage of S&P 500 stocks above its 20- and/or 50-session moving averages was below 20%. Elsewhere, the VIX climbed back to the top of its 30 range and the share of bearish individual investors hit its lowest level since 2009 last week, according to the AAII survey.

While this oversold environment does not guarantee a recovery, it is fertile ground for renewed risk appetite. The risk/return ratio has therefore again favored purchases in the short term.

However, the Nasdaq 100 will have to confirm its rebound from yesterday by surpassing Friday’s high of around 11,300 points. A breach of this threshold would open the way for a retracement of the last few weeks’ decline. A return to 12,000 points would be possible before a continuation of the underlying downtrend.

Entry: Purchase over 11,300 points

Stop: 11,000 points

Goal: 12,000 points

Risk/reward ratio: 3

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