Nasdaq Leadership in Question

Looking at a chart of the Nasdaq 100 index you would conclude life is good relative to investing in the index. However, there are plenty of headlines focused on the technology sector. Most are not overly optimistic. In fact some are calling for the technology sector be one of the worst performing sectors of 2010. Valid or not they have garnered the attention of investors. Semiconductors fell 3.6% on Tuesday as the broad market turned lower. The Nasdaq 100 index fell 1.3% as a result causing some anxiety.

As you can see on the chart below the index tested the first line of support, the 20 day moving average. The uptrend remains in play and the outlook is still optimistic from my view. All the noise over last year performance is just that. The challenge facing the index is earnings. If they disappoint then we have a challenge. With the sentiment swing teetering on negative it won’t take much to push the index lower and test the next range of support for the index at 1780-1820.

Intel will be the first challenge for the index. If the data is positive the Nasdaq 100 is likely to break above the current resistance at 1890 and move higher. Depending on the disappointment level we bring the first support level back into play and eventually the trendline 50 day moving average. Either way there is opportunity for the index and you as an investor. Have a strategy in place to capture the resulting move both short term and longer term. Entry, Exit and Target on every investment is key to having a discipline in place for investing money.