NASDAQ
In 1971, the fully electronic trading platform Nasdaq was founded in America. 14 years later, in 1985, a condensed form of it was founded, the Nasdaq 100, which brings together the 100 most valuable and important American technology companies.
Outlook 2025
After the US presidential election, in which Donald Trump emerged impressively as the winner, the Nasdaq 100 initially exploded as we had predicted and we were able to realize breathtaking gains. The Nasdaq 100 reached a new record high of 22,133 on December 16, 2024. At the US Federal Reserve meeting in December 2024, Fed Chairman Jerome Powell announced that instead of four interest rate cuts, there would only be two interest rate cuts in 2025. The main reason was expected rising inflation due to the future tariff policy of the new President Donald Trump, which he announced shortly after his election. The US Federal Reserve's decision led to massive price losses on the US bond market and rising interest rates, which triggered a correction on the Nasdaq 100. Strong economic data from December, especially a US labor market report that was far above expectations, caused US bond market yields to continue to rise sharply, with 10-year US government bonds rising to 4.8% and soon approaching the 5% mark. As a result, the Nasdaq 100 fell further to 20718 on December 10, 2025. Strong technical support is at 20000, which could soon be tested. Since we expect US bond yields to fall again in the spring, the strong long-term uptrend in the Nasdaq 100 will continue and reach new record highs.
Buying zone in the Nasdaq 100: 19000 to 20300 in January 2025
Price target by the end of 2025: 24000
Update on June 18 2024 – NASDAQ 100
Since our buy signal on October 26, 2023 with the buy zone 14,000 to 14,200, the
NASDAQ 100 has literally exploded in the AI frenzy under the leadership of our top stock Nvidia, and as of today (June 18, 2024) has now gained 40% with a new all-time high of 20,000 points. Our price target for 2024 has thus been reached. The now extremely high valuation and negative divergences in the stochastic oscillator and MACD are signs of an impending correction on the Nasdaq 100.
With a leverage of 20, a 40% profit (as of June 2024) in the Nasdaq 100 is 800% in just 9 months.
With a leverage of 50, that's almost 2000% in just 9 months.
Update September 2024 - Nasdaq 100
After the overdue correction of up to 17% in the Nasdaq 100 in July and August, a recovery began that will lead to new record highs in the fourth quarter of 2024.
JR Finanz Research is increasing its previous price target for the NASDAQ 100 from 22,000 points for 2025. Our price target for 2025 is increasing to 23,000 points,
based on the technology-heavy index, which has great profit potential, especially during interest rate cut cycles. Following the latest inflation figures in August of 2.6% and a target rate of 2% by the Federal Reserve, as well as a very strong US economy with 3% growth in the second quarter and a very robust labor market with an unemployment rate of 4.2% in August, the first interest rate cut by the US Federal Reserve has been delayed until September 2024, as we had already forecast in June.
Based on these positive fundamental developments in the monetary policy of the US Federal Reserve with the start of a new interest rate cut cycle from September 2024, a strong US economy and the US presidential elections on November 5, 2024, which always have a very positive impact on the US stock markets, as well as the long-term AI boom, JR Finanz Research expects a continued positive development of US technology stocks from November 2024. However, the upward momentum in the Nasdaq 100 will weaken somewhat because the cyclical stocks and smaller companies will perform better than in 2024 due to a backlog of demand.
Nvidia will continue to be the price driver and growth guarantor in the Nasdaq 100 and with 2 further interest rate cuts by the US Federal Reserve in 2024 and 4 interest rate cuts in 2025 of 0.25% each, the Nasdaq 100 will also outperform all stock indices in 2025. We currently have the best fundamental market environment in many decades with huge profit potential.
The figure above shows the typical trading pattern of a year in which US presidential elections take place. The price development is particularly strong after the US elections in the months of November and December.
These two months also mark the beginning of the seasonally best period on the US stock market, with the Best Six Months strategy, which runs from November to April. See the chart below of the Dow Jones Industrial Index.
Buy signal on the NASDAQ 100 Index
October 26, 2023
The US Federal Reserve's rate hike cycle has ended because
the US labor market is weakening
and US economic data is also weakening
Inflation rate has fallen from 9% in June 2022 to 3.7% in October 2023
1. Best seasonal phase begins in early November
2. Megatrend -> AI as the only source of growth - preferred stocks: Invidia, Microsoft, Amazon, Meta, Apple and Alphabet
3. Market technology -> Buy signals from the technical analysis after the autumn correction
4. High cash holdings
buying sigal
Outlook 2024
5. First interest rate cut by the US Federal Reserve in the third quarter of 2024
6. US inflation rate reaches target of 2% in 2025
7. Falling interest rates on US government bonds and rising prices on US stocks
8. Increasing economic growth in the USA
9. Rising corporate profits
10. Low rating after correction
11. Falling interest rates lead to more investments by companies
12. Falling loan interest rates lead to more consumption among consumers
13. Shifting from bonds and fixed-term deposits to equities
14. US presidential election 2024: Election years have always been good stock market years because the incumbent government tries to keep the economy growing because many voters vote with their wallets
Buying zone of the NASDAQ 100 Future 14,000 to 14,200 points.
Price target 2024: new all-time record 20,000 points
The main drivers of the Nasdaq 100 are just a handful of technology stocks, namely Apple, Microsoft, Amazon, Google and Facebook. Together, the 5 stock market heavyweights have a market capitalization of .... , which means that, measured by their market value, they account for 24% of the SMP 500 and 95.3% of the gains in the S&P500 since January 1, 2023. Investors are betting on a stable business model for the fantastic 5: market power, decent growth, sharply rising profits, robust balance sheets and high profit margins. => highly valued by investors. The business models have become predictable because companies no longer demand one-off license income as they used to, but have focused more on subscription models, which means revenues that come in regularly every month and are therefore easy for investors to estimate. The best example of this is the cloud businesses at Microsoft, Google and Amazon, which are of great importance, or subscriptions such as Apple Music or Amazon Prime. The high demand for services means that the profits of tech companies grow much more strongly and sustainably than the profits of other companies; they are commodity money printing machines. In addition, thanks to enormous cash inflows, the companies are swimming in so much money that they regularly buy back their own shares, thereby driving up the profits of the share.
Growth drivers AI and cloud computing in the Nasdaq 100.
The Nasdaq100 will remain in the leading role in the future and outperform all other sectors.
Influence of the FED's monetary policy on technology stocks. Higher interest rates devalue future profits of the high-growth and highly valued technology companies, which are very interest-sensitive due to their tendentially high debt ratio.
The environment for highly valued tech stocks is improving as the FED's interest rate hike cycle is weakening with smaller interest rate steps of 25 basis points and an end to the interest rate hikes is in sight. Easing interest rate concerns are strengthening the Nasdaq100. The wave of layoffs in tech stocks is having a positive effect because companies are paying more attention to their costs. JP Morgan expects a strong long-term buying impulse for technology stocks as soon as the FED starts cutting interest rates in 2024. The hype surrounding AI has driven US stock indices to new highs. Our buy signal from October 26, 2023 at around 14,100 index points reached an all-time high of 18,055 points on February 12, 2024. AI is currently the magic word on Wall Street; as a technological innovation, it represents almost endless profit fantasies for investors and even outshines the current interest rate uncertainty, mixed European economic figures, and the increasingly difficult geostrategic global situation. Non-Microsoft sales rose 18% to $62 billion. Revenues from the important cloud division, which provides computing capacity for AI, increased by 20% to $25.9 billion. Profits rose by 33% to $21.9 billion. Microsoft reached a new all-time high of $420. Microsoft was driven in the fourth quarter, partly by AI, far exceeding analysts' expectations and making Microsoft the most valuable company in the world. The boom in cloud offerings and AI-related products gave Microsoft an excellent quarterly result. Shares in companies related to the current AI boom have fueled Wall Street's recent record run.
Meta is benefiting from a flourishing advertising business. Meta rose significantly, Meta literally exploded and marked a new record high of almost $500, +25%. New record levels on Wall Street. A real gold rush on the stock market.
The joy over the strong company balance sheets ultimately overshadowed investors' worries. It is becoming increasingly clear that the markets and the economy are coping well with the high interest rate environment, so investors feel that the need to ease interest rates is less urgent. The S&P500 was aiming for 5000 points and reached a new all-time high of 5030 points, above 5000 for the first time.
The tech stocks have had very strong quarterly reports and have pushed the major US stock indices further up and set further records. The rally received fresh momentum after the business figures from the technology giants Meta and Amazon. Wall Street was like a gold rush.