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What MM’s current thoughts towards the Nasdaq?

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Question asked 10/12/2022

What MM’s current thoughts towards the Nasdaq?

Hi guys, Appreciate all the work which goes on behind the scenes and good job with the daily reports. Can I ask your thoughts on the Nasdaq? I'm pretty heavily leveraged as I've been expecting a decent recovery. I've had a few targets marked for what seems like most of the year, but so far, I've been left waiting and starting to doubt if a recovery will happen any time in the next year. I've had 14300 marked for most of the year as my longer term TP. 13700 and 12500. Have you got any thoughts on next weeks Fed moves or PPI guess for Friday night? I'm a bit concerned that the last 4 months gains could be wiped out if next week sees another 0.75% rate hike. Do you think the ~15% recovery was all that was in the tank? I'm considering existing the position if we get a run to $12000 for the Santa rally - My fingers are crossed. Regards, Simon

Answer

Hi Simon,

We have been overweight the Tech Sector at MM since October, we had been looking for a bond yield inspired squeeze up towards 14,000, or +20% above Thursday nights close. Unfortunately, while we have seen the pull back in yields we had been targeting, the growth stocks have continued to drag the chain hence as we’ve mentioned of late our target has been reduced to ~10% higher, probably now at best.

Both the Feds decision and important inflation data being released as we move into December will likely have a huge impact on the tech names, fingers crossed we see nothing too hawkish! As it stands, the market has fully priced in a 50bps rate hike but not a 75bps. We think they will go 50bps and guide to a pivot. The futures market currently thinks rates will peak at 4.94% in March of 2023 i.e. with rates at 4% now, we are close to a top in US interest rates.

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US Nasdaq 100 Index Chart

LAST UPDATED 09/12/2022 16:38

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