Technical analysis

Nasdaq reaches new highs thanks to Nvidia. What to expect now?

Together with the S&P 500, the Nasdaq also seems to be heading towards new all-time highs.
The downward trend of the last two weeks had alarmed investors, and there was widespread talk of possible further declines.
However, these fears appear to have quickly dissipated with the release of NVIDIA's earnings, which fueled a whirlwind of buying in the US stock market.
Attention remains focused on the Nasdaq, precisely because of its nature as the "technological index" par excellence.
In light of recent financial market movements, what is reasonable to expect? NVIDIA's rally pushes the Nasdaq index higher One fact remains: no amount of alarmism has yet managed to stop the fury of purchases on Nvidia shares.
The company expects a substantial increase in revenue for the first quarter of the year, thanks largely to the boost from artificial intelligence.
Now, the company has become, in terms of capitalisation, particularly impressive, and a capital increase in the price of its shares has a substantial impact on the indices representing the US market.
In particular, the Nasdaq index, within which NVDA shares represent approximately 4%.
However, the disclosure of the quarter's results amplified a certain climate of euphoria towards the entire technological market segment, and the fever for AI also influenced investors in other highly capitalized companies in the index: the top three capitalizations are Apple, Microsoft and Amazon, with a yield of 1.12%, 2.35% and 3.55% respectively.
Naturally, this resulted in a strong appreciation of the Nasdaq index, which, after some negative sessions, finally returned to show strength, once again reaching its absolute highs, despite the pessimists.
Nasdaq: a look at the graph Artificial intelligence is literally acting as a magnet for capital on the financial markets.
"AI" is increasingly mentioned by CEOs of various technology companies and this evidence seems to be particularly welcomed by the market.
On the other hand, the introduction of artificial intelligence systems could bring greater profit to companies that manage to establish themselves in the market, and a sort of competition is being created on the stock exchange to identify the next "Apple" of 2008.
Consequently, price-to-earnings (P/E) ratios have reached outliers compared to past averages.
It is in this climate of enthusiasm that the Nasdaq index moved towards its all-time highs.
A dynamic that is confirmed not only on fundamental but also technical bases: the Nasdaq index has reached an overbought zone.
The RSI oscillator, on a weekly basis, reached and exceeded 70 points, in a historical period in which the P/Es of stock indices have largely exceeded their historical average.

Author: Hermes A.I.

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