S&P 500 Shows Signs of Exhaustion, Nasdaq Next Gen 100 Index

The S&P 500 has been experiencing a steady rise for the majority of the past 13 weeks, a pattern unseen since 1985. However, according to Jonathan Krinsky, a prominent Wall Street analyst at BTIG, signs of fatigue are starting to emerge. In a recent client note, Krinsky highlighted that while the upward momentum is still strong, caution is warranted.

With 38% of S&P 500 companies scheduled to release their earnings this week, it may be time for the main indexes to undergo a period of consolidation. However, Krinsky believes that there are still opportunities to be found elsewhere. He sees potential in the Nasdaq Next Gen 100 index, which consists of the next 100 largest companies trading on the Nasdaq following the initial 100 companies that make up the Nasdaq-100. This index, comprised of Nasdaq "also-rans," has been forming a solid foundation over the past two years and appears ready for a breakout.

It should be noted that the S&P 500 and Nasdaq-100 indices have both reached record levels thanks to significant gains from a select group of megacap technology stocks since the beginning of 2024.

As many of the companies in the Nasdaq-100 index prepare to announce their earnings for Q4 2023 this week, signs of exhaustion are becoming apparent. Therefore, Krinsky's focus has shifted towards the promising potential of the Nasdaq Next Gen 100 index.

Overall, while the S&P 500 may be showing early signs of reaching its peak, there are other avenues for investors to explore. By diverting attention to the Nasdaq Next Gen 100 index, one may find new and exciting opportunities in the ever-evolving world of finance.

The Outlook for Nasdaq Next Gen 100 Index

The Nasdaq Next Gen 100 Index has faced a daunting task to sustain its momentum after many companies reported impressive earnings. However, technical analyst Krinsky believes that there is still room for growth beyond the top 100 NDX names. With the index testing the 1100 level repeatedly over the past two years, a significant breakout could be on the horizon.

Promising Companies to Watch

Krinsky has identified four companies from the next-gen Nasdaq list that appear particularly promising based on recent trading activity. These companies include:

1. DraftKings Inc. (DKNG): A leading sports-betting company.
2. F5 Inc. (FFIV): A cloud-security company.
3. Hologic Inc. (HOLX): A medical-technology company.
4. Repligen Corp. (RGEN): A pharmaceutical company.

Performance of Invesco Nasdaq Next Gen 100 ETF

The Invesco Nasdaq Next Gen 100 exchange-traded fund (QQQJ) has experienced a slight decline of 1.2% since the beginning of the year. Despite this, the fund started the week relatively stable, with a marginal decrease, trading at $26.67 per share.