Nasdaq 100 Weekly Market Insights - Week of February 3rd

Market Analysis for Nasdaq 100 for the Week of February 3rd, 2025

Overview:

The Nasdaq 100 has been riding the wave of technological innovation and AI growth, leading to significant gains in early 2025. However, the index is now facing resistance, suggesting a possible pause or correction, influenced by high valuations and market expectations around tech policy changes from the Trump administration.

Technical Analysis:

• Nasdaq Futures (NQ_F) Key Price Levels:

  • Resistance Levels:

    • 22,300 (key resistance, where recent highs were tested)

    • 22,150

    • 22,000

  • Support Levels: 

    • 21,850 (first significant support)

    • 21,700

    • 21,550

    • 21,400 (could signal a deeper pullback if breached)

  • Pivots: 

    • Daily Pivot around 22,050, suggesting a midpoint for potential market swings this week.

  
  

  The market has shown signs of struggling at these resistance levels, with the RSI indicating overbought conditions, which might lead to a correction if the bullish momentum doesn't continue.

  
  

• Elliott Wave & Trend Analysis:

  • The Nasdaq 100 appears to be in a potential wave 4 correction within an ongoing bullish trend. A clear break above resistance could signal the start of wave 5, while a failure might extend the correction.

Fundamental Outlook:

• Tech Sector Earnings and AI Developments: 

  • Earnings from tech giants and AI innovations continue to drive the index, but there's caution about sustainability at current valuations.

• Policy Influence: 

  • Anticipation around tech-friendly policies, such as those related to AI infrastructure or regulatory environments, could either propel the index higher or lead to profit-taking if expectations are not met.

• Market Sentiment: 

  • Posts found on X reflect a market with high expectations but also concerns about overvaluation, with some traders looking for breakouts and others preparing for potential corrections.

Options Chain Data for QQQ ETF:

• Call Options: 

  • High open interest at strike prices of 540 and 545, indicating market expectations for a potential rally beyond current levels.

  • The weekly high estimate of 532 suggests these calls might be in anticipation of a new high.

• Put Options: 

  • Significant open interest at 520 and 515, aligning with the weekly low estimate, suggesting these could be key support areas where investors are looking to buy dips or protect positions.

  • The neutral range of 518-526 observed in recent posts shows where much of the market might expect trading to hover.

• Volatility: 

  • The QQQ has shown increased implied volatility, indicating that traders are preparing for potential volatility, especially ahead of key earnings or policy announcements.

Conclusion:

For the week of February 3rd, 2025, the Nasdaq 100 is at a critical juncture with resistance at 22,300. A break above this level could lead to further gains, particularly if tech earnings continue to impress or if policy changes are favorable. However, if the index fails to break this resistance, we might see a correction back to support levels, especially if there's any negative news or if the broader market sentiment shifts. The options market for QQQ shows a balanced approach, with interest in both bullish and bearish scenarios, suggesting investors are ready for various outcomes. Keeping an eye on these technical levels, alongside fundamental developments, will be essential for navigating this week's market dynamics.