Insights 
VT 
The NASDAQ 100 experienced its most challenging day in three weeks, yet analysis suggests an 11% potential rise to a long-term resistance level at 29,000. Factors influencing this prospective increase include Federal Reserve rate cuts, Big Tech earnings reports from Alphabet and Microsoft, and the ongoing momentum of the AI rally.
A retest of 24,500 as support is anticipated before the index progresses towards the year-end. Meanwhile, related financial data reflects fluctuations, such as the EUR/USD falling to a three-month low and the GBP/USD declining to a seven-month low amid fiscal concerns. Other market movements include gold edging below $4,000 and Bitcoin’s uncertain market demand.
Strategic Entry Point
The recent dip in the NASDAQ 100, its sharpest in three weeks, should be seen as a strategic entry point rather than a sign of a reversal. We are watching for a potential retest of the 24,500 support level in the coming days. This short-term weakness is being driven by profit-taking after a strong quarter where the index rallied over 8%.
The Federal Reserve’s recent pivot towards a more dovish stance is the key catalyst for the expected year-end rally. After holding rates above 5% through much of 2024, the first quarter-point cut last month and recent inflation data showing CPI at 2.8% reinforce our view that more cuts are coming in 2026. This environment of easing financial conditions is historically bullish for growth-oriented tech stocks.
While recent earnings from giants like Microsoft and Alphabet were strong on AI-driven cloud growth, their cautious forward guidance contributed to the current pullback. We see this as a temporary sentiment shift, as the underlying AI infrastructure build-out continues to accelerate. This suggests any weakness in key tech names is an opportunity to position for the next leg up.
Immediate Term Strategies
For the immediate term, we could consider protective strategies while the index searches for a bottom near 24,500. Buying put options with near-term expiries or selling out-of-the-money call spreads can hedge against further downside. The recent spike in the VIX to over 18, its highest level since August, makes these options more expensive but reflects the current market uncertainty.
Once we see signs of support firming up around 24,500, the focus should shift to bullish positions targeting the 29,000 level into January 2026. This could involve buying call options or establishing bull call spreads to capitalize on the expected 11% rally. Historically, markets often experience a strong “Santa Claus rally” in the final months of the year, a pattern we saw play out strongly in late 2023 when the index gained nearly 10% in November and December.
