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Nasdaq 100 Stocks Crashing! What to do?



The high growth stocks in Nasdaq 100 have had an enormous run up in the year 2020 and the beginning of year 2021. The COVID pandemic has triggered off an unprecedented change in human lifestyle and accelerated exponential growth in mainly the tech sectors. Vaccines have been rolled out across the world and will be distributed throughout the year 2021 to get as many people vaccinated as possible.


However, high growth stocks in Nasdaq 100 have seen a pullback of about 11% since the All Time High on 16th February 2021, the day when the filings of quarterly reports from the top money managers and institutional funds are released to the public.


What is happening and why is the Nasdaq 100 stocks pulling back so hard?


Honestly, I don't know. No one will know the answer.


What is the plan forward?


Based on Technical Analysis, a Head and Shoulder Pattern is formed which shows some short term bearish signs for the Nasdaq 100 Index. However, the price is currently hovering around the 100EMA level and strong horizontal support formed from previous resistance around the $12,400 price point which may form a reversal in trend to move up again.


If the price cannot hold and bounce back up, it may potentially fall lower to the next support region of around $11,000 to $12,000 before climbing back up. Overall, the big, long term trend is still bullish with the economy recovering from the pandemic, so there is nothing to worry about.


Besides that, the S&P 500 Index has not been falling as hard as the Nasdaq 100 Index, and the Dow Jones Index climbing to an All Time High. This shows obvious signs of rotation of investments from high growth stocks to cyclical and value stocks especially in the financial, industrial, and energy sector. As the reopening of the economy outlook is positive with vaccines rolling out well, there is bound to be a comeback for the cyclical stocks.


5 Potential stocks to look out for:


1) TESLA (TSLA)



It has been a while Tesla had a huge correction since the COVID crash. If you have strong conviction in Tesla, this is the time to add in some shares as the price nears the 200EMA at about $500. Possible strategy for options trading is to do a 1-month bull put spread at $500 strike price.


2) PALANTIR (PLTR)



For those who have high conviction for PLTR, the current price point is a good price to add some shares which is a horizontal support coinciding with the 100EMA at $22.50. Similarly, possible strategy for options trading is to do a 1-month bull put spread at $20 strike price. However, do note that PLTR is currently on a down trend in which the price may fall to $20 or even $16.


3) ADVANCED MICRO DEVICES (AMD)



For those who have high conviction for AMD, the current price point is a good price to add some shares which is at a horizontal support at $74. However, do note that there was 2 gap ups from $60 to $74 during July-August 2020. If the support at $74 fails, the price may go down towards the $50 - $60 range.


4) APPLE INC (AAPL)




Similar to Tesla, it has been a while Apple had a huge correction since the COVID crash. If you have strong conviction in Apple, this is the time to add in some shares as the price nears the 200EMA at about $113 which also coincides with a horizontal support. Possible strategy for options trading is to do a 1-month bull put spread at $110 strike price.


5) SEA LIMITED (SE)



Sea Limited has had an enormous run up which has some backing from its tremendous growth year-on-year. If you have strong conviction in SE, this is a great opportunity to add in some shares as the price is around the 100EMA at about $205 which also coincides with a horizontal support. Possible strategy for options trading is to do a 1-month bull put spread at $175 strike price.



So, what do you think after reading all that I have written? Let me know your thoughts and your personal watchlist in the comments section below!


 

** Above information is time sensitive. Please do your own due diligence before taking action.

 

Disclaimer:


This post here does not serve as an investment advice, and is not a recommendation to buy or sell. Please do your own due diligence before starting any form of investment. Use the content at your own risk. I do not own some of the pictures and screenshots taken from different source of websites, and the illustrations attached are purely for education purpose.

 

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