The Nasdaq 100, a benchmark index for technology stocks (QQQ), has been the center of attention for investors as it reached an all-time high in early 2022. However, recent chart patterns have raised concerns among traders as the index violated its 2023 bullish trendline. In this blog post, we will analyze the Nasdaq’s chart and discuss why we don’t believe it’s a good idea to sell tech stocks. Instead, we believe an approach that involves buying quality tech stocks at lower levels, taking advantage of the potential pullback in September.
Note that our ‘September pullback’ forecast is based on our proprietary timeline analysis, not just seasonality, which includes (among several other practices) what we explained in Decoding Signals from a Leading Indicator.
Nasdaq Chart Analysis
The chart of the Nasdaq 100 reveals important insights about the index’s recent performance. The green shaded area represents a 10-year rising channel, with 2022 witnessing a violent test of its support. Since the end of May 2023, the Nasdaq has broken out of its consolidation phase and reached its first bullish target, indicating a strong uptrend.
However, the most concerning aspect is the break of the rising trendline since May 2023, now signaling a potential pause and pullback in September. Historically, September is a volatile month for markets, making investors cautious about their tech stock holdings.
Timing the Pullback
Our timeline analysis aligns with historical data, suggesting that the first week of September might be rough, starting from the last week of August. This projection highlights the importance of being prepared and having a clear strategy in place.
Let’s be clear, the pullback we are forecasting is a tactical pullback, not a secular ‘event’. We explained, in great detail: Forecasting The Next Bearish Turning Point: No Secular Bearish Turning Point In 2023.
Sell Tech Stocks? No, Buy Tech Stocks in September
The tech stocks naysayers were wrong back in May. They will sing the ‘short tech stocks’ song again. We partially agree: we believe some tech stocks should be bought, others should be ignored. Buy quality tech stocks, get timing right, is our mantra.
While some investors might be tempted to sell their tech stocks in anticipation of the pullback, this approach might not be the most prudent. Timing market movements perfectly is extremely challenging, even for seasoned investors. Instead, a more strategic approach would be to create a shortlist of top tech stocks to buy when the Nasdaq index falls back to around 13,600 points.
Taking Advantage of Quality Tech Stocks
The potential pullback in the Nasdaq provides an excellent opportunity for investors to acquire quality tech stocks at lower prices. The secular uptrend in the Nasdaq is expected to continue in the long run, making this a favorable time to accumulate strong tech companies with solid fundamentals.
The Importance of a Shortlist
Having a shortlist of top tech stocks ready for buying opportunities can be highly beneficial. By carefully researching and identifying promising tech companies, investors can make informed decisions when the market presents favorable entry points.
It’s crucial to maintain a long-term perspective when investing in the stock market. Short-term pullbacks are a natural part of the market cycle, and knee-jerk reactions to such events can lead to missed opportunities.
In addition to focusing on tech stocks, investors should also consider diversifying their portfolios across various sectors. Diversification can help mitigate risks and provide a more stable investment landscape.
Conclusion: To Sell Tech Stocks or Not To Sell?
While the Nasdaq’s violation of its 2023 bullish trendline has raised concerns, investors should refrain from selling tech stocks hastily. Instead, a more strategic approach involves preparing a shortlist of top tech stocks to buy at lower levels during the potential pullback. With a long-term perspective and a focus on quality companies, investors can position themselves for success in the ever-evolving tech market.
That’s why we created a list of top tech stocks, specifically in the AI & Robotics space. We firmly believe that, if there is one tech sector that will do well, it will be the sector that will bring productivity gains. We called it the PRODUCTIVITY MEGA-TREND. We recommend you sign up here to access our top selection in AI & Robotics stocks >>