Jun 19, 2023

The Nasdaq 100, focused on technology, still has room to rise to all-time highs near 16,771.

NAS100 – Daily Chart

NAS100 Daily Chart

The NAS100 trades at 15,128 and has 2,000 points of upside to reach the resistance level.

According to Citibank’s US equity strategist, this year’s buzz around artificial intelligence has resulted in a limited rally in the US stock market. He now expects a “digestion phase.”

This year’s rally in technology stocks is fueled by investor optimism about AI’s potential. The Nasdaq has gained 37% this year, its best-ever return for the first six months. Microsoft and Nvidia have been at the forefront of the AI revolution and market. Investors are now looking for the following winners as a result of the new technology shift:

Other market observers are concerned that a few stocks are driving the rally. “We’ve got the euphoria around AI that’s driven the growth component of the market,” Citi’s Scott Chronert told CNBC.

“This is not a market-wide movement. From that vantage point, this is a very narrow move. It is based on long-term potential. Our concern is that the long-term promise has yet to be seen in the fundamentals. It will take time for this to occur. However, we anticipate a digestion phase between now and then.” Chronert added this remark.

Other analysts, such as JPMorgan’s top strategist, Marko Kolanovic, have warned that the tech stock rally has been overly aggressive, resulting in an asset bubble.

“Typically, when only a small number of stocks are performing well, you get overvaluation and speculative behaviour— everyone pumps money into these stocks, and we have another tech bubble like we did in the late 1990s and early 2000s,” Schroders’ Remi Olu-Pitan told the Financial Times. “You could argue that we’re sown the seeds of that.”

Despite the negative sentiment, traders in the Nasdaq still have 2,000 points to capture if it returns to its previous all-time high.

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