Nasdaq 100 Forecast:
Nasdaq 100 Price Outlook: Micron Sees Quarterly Boost from Quarantine
The Nasdaq 100 has outperformed the Dow Jones and S&P 500 in recent weeks, despite its high exposure to the technology industry. While the tech sector is typically one of the more volatile, some of its leading components like Apple, Microsoft and Google have been a driving force behind the stock market highs we enjoyed in February and were able to build significant cash holdings simultaneously.
Nasdaq 100 Price Chart: Daily Time Frame (March 2018 – March 2020)
On top of their financial standings, many possess business models that are not solely reliant on brick and mortar operations which could see a reduced impact due to coronavirus relative to industries like retail or auto. In fact, some tech stocks have reported raising forecasts due to a quarantine-linked increase in demand, namely the Boise-based semiconductor stock Micron.
Chart created in TradingView
In the company’s second quarter earnings report released Wednesday, Micron said it “forecasts current-quarter revenue above analysts’ estimates on Wednesday and said a surge in demand from data center operators could fuel supply shortages.” Similarly, it found “notebooks that support work-from-home and virtual learning are increasingly in demand.” Together, the unique market landscape in the wake of government mandated quarantine has created a silver lining for some technology stocks.
In conjunction with the properties of the overall sector discussed previously, the tech-heavy Nasdaq 100 may continue to outperform the Dow Jones and S&P 500 in the days ahead. Therefore, upcoming commentary from other technology stocks, and semiconductor-producers specifically, could provide unique insight amid the coronavirus outbreak. Unfortunately, earnings season does not begin in earnest for another two weeks, so immediate updates will be few and far between.
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That being said, traders seeking equity exposure could explore bullish positions on the Nasdaq while looking for bearish opportunities on the Dow or S&P 500. While the three are highly correlated, there is some degree of deviation that might allow traders to capitalize on the relative outperformance of the Nasdaq should it continue. Still, such a strategy would be expensive to maintain. In the meantime, follow @PeterHanksFX on Twitter for updates.
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–Written by Peter Hanks, Junior Analyst for DailyFX.com
Contact and follow Peter on Twitter @PeterHanksFX
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