Nasdaq 100 & Dow Jones Price Forecast:
Nasdaq 100 Outpaces Dow Jones as Reflation Trade is Put on Pause
If recent price moves are any indication, the Nasdaq 100 has reclaimed its throne as the leader of US equity price action as fast growing technology stocks outpace value stocks that had helped prop up the Dow Jones in recent months. The growth-to-value rotation had become known as the reflation trade and was a widely-watched stock investment trend in the first five months of the year, but has recently lost much of its steam. The shifting landscape is perhaps most evident in the Nasdaq 100 to Dow Jones ratio, a rough growth to value barometer.
Nasdaq 100 to Dow Jones Ratio: Daily Time Frame (January 2020 – June 2021)
The ratio, which had been trending lower since February, tagged its highest level since February 22 this week and snapped a series of lower highs and lower lows that had materialized over the last four months in the process. While technical analysis on a ratio of two indices has limited usefulness, it does help to highlight the changing relationship which can be confirmed by looking at the Nasdaq 100 and Dow Jones price charts individually.
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Nasdaq 100 Price Forecast
In the case of the Nasdaq 100, the tech-heavy index has established a series of fresh all-time highs after breaking above resistance early this week. With few barriers to the topside, the Nasdaq 100 may look to continue its gradual climb higher in the weeks ahead – as long as risk aversion remains at bay - and might utilize prior resistance as support going forward.
