The Nasdaq 100 index (which houses the stock and share prices of blue-chip technology companies) is currently experiencing its worst quarter for a decade. Over the last two months, the tech index has shown a loss of 12%. It’s rare for any index to plummet this dramatically so quickly.
However, not everyone believes the situation is a disaster. Trading analyst, Todd Gordon, believes that “the market is set for a bit of a relief rally” and that Nasdaq stocks will bounce back very soon.
Trade War Easing?
Nasdaq stocks originally started to fall as a result of the trade war between the US and China. Both nations have the power to impose sanctions that could impact tech companies, both directly and indirectly. Naturally, this lead to a sell-off of stocks that drove prices down even further. But why does Todd Gordon believe that this situation might be short-lived?
The answer lies in the fact that each round of sell-offs has been less significant than the one preceding it. As Gordon told the news outlet CNBC, “momentum as measure by RSI, which is the relative strength index, has actually been decreasing on each push to new lows”. In other words, traders are losing interest in selling off their stocks. This suggests that, fairly soon, there will be a wave of demand for Nasdaq stocks, driving prices back up.
Quality Stocks
It’s easy to see why Todd Gordon is likely to be correct.