Dow Jones, Nasdaq 100, DAX 30, FTSE 100 Forecasts: Bearish
Dow Jones Forecast
Outlook: Bearish
US indices entered the weekend on the backfoot as investors await the upcoming Federal Open Market Committee rate decision in the week ahead. While no change to the interest rate range is expected, minor tweaks to the bond-buying, balance sheet expansion and maturity of held securities may become the focus of the market’s attention instead. The Federal Reserve’s monetary policy operations have become increasingly vast in the wake of coronavirus which has added another layer of complexity to the monetary policy adjustments.
The increased operations have also resulted in a rapidly expanding balance sheet, one that remains a key tailwind behind US equities. As other fundamental forces have come and gone, the Fed’s accommodation has remained and is likely a large part of the stellar performance the Dow Jones, Nasdaq 100 and S&P 500[1] have enjoyed this year. Thus, any perceived pullback in the Fed’s willingness to buoy the economy could seriously undermine the three indices.
Dow Jones Price Chart: 4 – Hour Time Frame (September 2020 – December 2020)
Difference between Dow, Nasdaq, and S&P 500: Major Facts & Opportunities[2]
Nasdaq 100 Forecast
Outlook: Bearish
The Nasdaq 100 suffered a modest decline last week despite a white-hot IPO market that has seen remarkable gains in recently-launched technology stocks. AirBnB was the most recent addition to the market[3] and quickly doubled from its opening price. Valued beneath $20 billion in March, the company briefly enjoyed a valuation greater than $100 billion – an alarming increase amidst a global pandemic.
Nasdaq 100 Price Chart: 4 – Hour Time Frame (August 2020 – December 2020)
Nasdaq Trading Basics: How to Trade Nasdaq 100[4]
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