Throughout December, the Nasdaq has exhibited remarkable performance, with a gain of over 5%. Furthermore, its performance for the entire year of 2023 is an impressive 43%, putting it on course for its strongest year since 2020. However, recent developments indicate that a degree of caution may be warranted, as the Nasdaq's performance is currently poised between a consolidation phase and a potential reversal.
Despite the initial losses, U.S. stocks managed to cling to their gains, with a streak of ten consecutive days of positive performance. This bullish sentiment pushed the Nasdaq 100 to a new record high of 16,830.
The Nasdaq's robust December performance and its exceptional showing throughout 2023 can be largely attributed to expectations of the Federal Reserve implementing interest rate cuts in the coming year. Additionally, positive economic data this week has exceeded expectations, with unexpected increases in existing home sales and significant gains in CB consumer confidence, marking its most substantial increase since early 2021.
From a technical perspective, the NAS100 is currently trading above both the 200-day and 50-day moving averages, indicating a bullish trend. However, it's worth noting that the Nasdaq is not far from yesterday's closing level, which raises caution. This proximity to the recent close could signify either an impending consolidation phase or the potential for a reversal.
In the short term, investors should keep an eye out for signs of weakness, particularly targeting the 16,750 area and potentially the 16,400 level. The latter served as a consolidation point at the beginning of December before the recent upward movement. These levels will be essential to watch as traders assess whether the Nasdaq's impressive run will continue or if a period of correction and consolidation is on the horizon before the year's end.
