Nasdaq 100 Index: Share Price, Chart and Forecast
The Nasdaq 100 is the world's most famous stock index for investors looking to invest in growth stocks, technology companies, or promising stocks of innovative companies. The NAS100 is also a popular index for short-term traders, who appreciate its high volatility.
This article will explain what is Nasdaq 100, its composition, and the evolution of it and its price. We will also look at its future prospects, and how to trade the Nasdaq 100 index.
What is Nasdaq 100 Index?
The Nasdaq is the second-largest U.S. stock market by volume traded, just behind the New York Stock Exchange (NYSE). It is also the most prominent electronic stock market in the world. It was founded on February 4, 1971 by the National Association of Securities Dealers (NASD).
Nasdaq 100 Definition
The Nasdaq100 index gathers the 100 most important stocks of the Nasdaq. The NASDAQ is mainly composed of technology, internet and telecom companies. However, there are also companies from the industrial, banking or transportation sectors for example. These are primarily companies with high growth potential. Today, it lists over 5,000 stocks.
The major companies that make up the Nasdaq are grouped under the Nasdaq 100, a stock market index of the 100 largest non-financial companies listed on the NASDAQ.
Nasdaq 100 Calculation and Weighting Rules
From a macro perspective, the Nasdaq 100 is a measure of the health of the U.S. technology sector, as more than half of the Nasdaq 100's shares come from this sector. This makes it a more volatile stock index than more diversified indices like the S&P 500.
The Nasdaq-100 Index is a modified market capitalization-weighted index. The index value equals the aggregate value of the weights of the stocks in the index, multiplied by the last sale price of each of those stocks, then divided by the index divisor.
This weighting is used to limit the largest companies' influence and balance the index with all members. No company in the Nasdaq-100 can have a weighting more significant than 24%.
Nasdaq 100 Today and History
The Nasdaq-100 index was established on January 31, 1985 by the NASDAQ. In 1998, foreign companies were admitted to the index. The index reached an all-time high of over 4,700 points in 2000 on the Dotcom wave.
The Nasdaq 100 Price Evolution
Let’s now look at the historical price evolution of the Nasdaq-100, since the late 1990s.
Nasdaq 100 Chart
Let's start by discovering the monthly Nasdaq 100 chart on which we will base our observations.
As seen on the Nasdaq 100 chart above, the index was a big winner of the internet bubble that burst in 2000. Starting from the 1000 points mark in early 1998, the index peaked at 4816 points in March 2000, a rise of more than 380% in just over 2 years. But this first record gave way to a severe downward trend, which brought the Nasdaq 100 to 825 points in September 2002 after a decline of 83% in two and a half years.
The Nasdaq then posted a slow recovery to 2240 points in 2007, before the financial crisis of 2008 hindered the rebound, bringing the Nasdaq 100 back to 1000 points that November.
Since then, the Nasdaq 100 has shown a powerfully upward trend. It has admittedly undergone a few corrections, notably in the face of the China-US trade war at the end of 2018, or the covid-19 pandemic at the beginning of 2020. But none of these setbacks has endangered the powerful underlying uptrend. As a result, the Nasdaq 100 reached an all-time high at 15,700 points in September 2020, and there's no telling where its rise will end.
Returns of the Nasdaq 100
The Nasdaq 100 average return has rewarded investors over the medium to long term generously. In fact, the Nasdaq 100's return is nearly 50% over 1 year.
- Over 5 years, the return of the Nasdaq 100 is almost 200%.
- Over 10 years, the index has increased by over 550%.
- Finally, the return since the creation of the Nasdaq-100 reaches an impressive +830%.
Also, the Nasdaq 100 average annual return has reached 21.5% over the last decade. Finally, the recent performance of the Nasdaq 100 index has not been too affected by the covid-19 pandemic, since it has offered a return of 43% in 2020, and 16% in 2021.
What Influences the Price of Nasdaq 100 Index?
Like all major stock market indices, the Nasdaq 100 is primarily influenced by major economic trends, as measured by statistics. Since the Nasdaq 100 contains a majority of technology stocks that are very sensitive to growth, indicators such as GDP or consumer confidence can greatly influence the price of the Nasdaq 100.
It is also important to note that the 3 largest stocks in the Nasdaq 100 account for 30% of the index. Therefore, news or analyst recommendations regarding these companies - Apple, Microsoft and Amazon - can also influence the price of the index.
Finally, since the Nasdaq 100 is the favourite stock index of short-term traders who use technical analysis a lot, we can also point out that on the shortest time horizons, technical analysis can have a direct influence on the Nasdaq 100 price.
The Nasdaq 100 Companies
Currently, the Nasdaq components are divided as follows:
- 57% of the Nasdaq 100 are technology companies
- Consumer Services, with 21.99%, is the second largest industry sector.
- Public Health makes up 7.08% of the Nasdaq-100
- Consumer Goods companies make up 6.14% of the Nasdaq 100
- Industrial companies - 5.92%.
The 3 largest Nasdaq 100 companies are Apple, Microsoft and the Nasdaq 100 stock Amazon. These 3 stocks account currently for 30% of the Nasdaq 100!
Furthermore, the top Nasdaq100 stocks represent more than half of the index. Moreover, 75% of the stocks in the index weight less than 1% of the total.
How Are the Nasdaq100 Companies Chosen?
For a stock to be included, it must meet specific criteria:
- Be listed for two years on the Nasdaq
- Have a daily trading volume of at least 200,000 shares,
- Be up to date with its quarterly and annual reports,
- Not be involved in bankruptcy proceedings.
The Nasdaq 100 index composition may change if any of the stocks that make up the index are delisted or no longer meet the criteria for inclusion in the Nasdaq 100. Apart from these exceptional cases, the index is rebalanced every year in December, when any necessary adjustments are made.
Nasdaq 100 List of Stocks
Below you will find Nasdaq 100 companies list, for the 20 biggest stocks of the index.
|Cisco Systems /Delaware||CSCO||Technology|
|Costco Wholesale||COST||Consumer Staples|
As you can see with this Nasdaq 100 list, there are stocks from different sectors, but the information technology sector is clearly over-represented.
Should I Trade the Nasdaq 100? Points to Consider
Is investing in the Nasdaq-100 right for you? To find out, consider these characteristics.
- Volatility: The index’s daily volatility is higher than that of the other major U.S. stock indices. This makes it a favorite among day traders.
- Technology bet: With more than 50% of the stocks in the index coming from the technology sector, it isn’t the most diversified index. This also means that it is the index that will raise the most when the market is bullish.
- Dividends: You’ll earn these if you hold Nasdaq 100 ETF, or a Nasdaq 100 index fund.
- Leverage: It is possible to trade the Nasdaq 100 with high leverage. This allows you to significantly increase the financial impact of movements.
- Ability to short: If you trade the Nasdaq 100 via CFDs, you will have the ability to short the index as easily as buying it. This allows you to profit from the volatility of the Nasdaq 100, whether it is rising or falling.
How Can I Trade the Nasdaq 100?
What is the best broker to buy Nasdaq 100 index? There are multiple good solutions, one of them being ZFX.
ZFX, a World-Class MT4 Broker
Created in 2018, ZFX is a reliable broker, regulated by the FCA. ZFX provides its clients with MT4, aka the most widely used platform globally, because of its technical analysis and automated trading advantages.
To help you personalize your experience, ZFX offers several accounts, with various minimum deposits and leverages. You’ll be able to indexes but also stocks, forex and commodities.
How to Trade the Nasdaq 100 Index Easily?
Buying Nasdaq 100 index through the broker ZFX is very simple and fast. Indeed, the account opening is done entirely online, and takes only a few minutes. Here’s how:
- 1 - Register with ZFX
- 2 - Make your first deposit
- 3 - Verify your ZFX account
- 4 - Trade the Nasdaq 100 index
Let's go through each of these steps in detail.
1 - Register with ZFX
For this first step, you will need to go to the ZFX broker's website, and click on the "open an account" button. You will then have to fill in a registration form with several personal details, including your phone number, which will be verified by SMS.
After filling out the form, click on "Next". Immediately after, ZFX will display your MT4 login and password, and invite you to download the platform.
2 - Make your First Deposit
To do this, you will need to click on the "make a deposit" button on the screen that is displayed immediately after registration.
You will then be asked to choose a payment method, like Mastercard:
Indicate the deposit amount and then click on "Confirm Deposit”. Then, add your credit card information before the final validation of the payment.
3 - Account Verification
Finally, you need to proceed with the account verification by sending supporting documents.
As shown in the image above, you will need to upload the documents to the ZFX website.
4 - Buy Nasdaq100 Index (NAS100)
Once your documents are validated, you will then be ready to buy Nasdaq 100 index. Simply download MT4, and follow the login instructions. You’ll then be able to invest in the index NAS100 with the settings you want.
Things to Know Before Investing in Nasdaq100 Index
This section will provide you with tips and tricks to start investing in the Nasdaq 100 index efficiently.
- The Nasdaq 100 opens at 9:30am and closes at 4:00pm local time, Monday through Friday. Short-term traders using Nasdaq 100 Futures or Nasdaq 100 CFDs can, however, trade before and after market hours.
- Technical analysis is the primary method used by day traders to trade the Nasdaq 100, so it is essential to learn the basics of chart analysis.
- Nasdaq 100 traders should follow the economic calendar on a daily basis, especially the US statistics, which directly impact the index.
- You can practice trading the Nasdaq-100 without risk with the ZFX broker demo account, to develop and improve a strategy before actually trading it.
Nasdaq100 Future, Forecast and Predictions
Let’s now analyse the Nasdaq 100 forecast to know if the index is more likely to rise or decline in the future. Fundamental and technical backdrops and analyst opinions will help us reach the most accurate conclusion possible.
Recommendations and Analyst Forecasts for Nasdaq100
- For the Nasdaq 100 stock Apple, the consensus is strongly bullish, with 19 out of 25 analysts recommending a buy. The average price target of $170 implies a potential upside of over 15%.
- Microsoft also benefits from positive analyst recommendations. Indeed, all 22 analysts recommend buying it. Their average target of $336 implies a potential gain of over 12%.
- Finally, the Nasdaq 100 stock Amazon also has unanimous support from analysts, with 31 recommending a Buy. The average target of $4220 implies a potential upside of 23%.
We can therefore easily conclude that analysts overall have a clearly bullish view on the future of the Nasdaq 100 index.
Fundamental Analysis of the Nasdaq100
The Nasdaq 100 was much less penalized than the other US stock market indexes during the covid-19 pandemic, for the simple reason that many of its stocks actually benefited from the pandemic. For example, lockdowns led to a surge in online shopping, which greatly benefited Amazon. The greater need to stay connected also benefited Apple's sales. And the shift to remote work has boosted demand for Microsoft's services.
But while the pandemic is slowly coming to an end, economists expect many of the trends that were exacerbated by the pandemic to continue beyond it. So, there is a good chance that Nasdaq-100 stocks will continue to rise.
Medium-Term Technical Analysis of the Nasdaq 100
The weekly Nasdaq 100 chart shows that the index has been in a powerful bullish trend since the March 2020 low around 6800 points. We notice that the index is evolving within a clearly visible bullish channel since September 2020. Thus, the first important threshold to watch will be the limits of this channel. A break below 14,500 points would be equivalent to an exit from the bottom of the channel, and therefore a bearish signal. However, we can only talk about a reversal of the underlying trend if it breaks below 14,000 points.
On the upside, the upper limit of the channel is currently around 16,000 points. A rise in the index above this level would be a new all-time high.
Bottom Line: Is Nasdaq 100 a Good Investment Now?
The Nasdaq 100 is a very technology-oriented stock index, which will appeal to growth-oriented investors and short-term traders, thanks to its volatility.
In addition, the outlook for the Nasdaq 100 looks bullish, with a clear positive long-term chart trend, more than optimistic analysts, and an economic environment that should continue to favor the top stocks in the Nasdaq 100. If you would like to start profiting from the Nasdaq 100 now, you can do so via ZFX, which provides competitive rates and the very powerful MT4 platform.