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Nasdaq-100 Index. The Psychological Aspects of Round NumbersIn the complex dance of commerce and finance, price tags play a key role in influencing consumer decisions. While it’s a fairly common psychological assumption that every penny and cent counts when it comes to getting the best deal, human psychology often deviates from this linear logic. In this educational post, we explore the irresistible appeal of round numbers, and how they often trump other considerations when making transaction decisions. The Irresistible Attraction to Round Numbers We do often believe that every penny counts in our transactions. However, research shows a striking deviation from this assumption. In scenarios where people choose a price, such as tipping at a restaurant or donating to beloved author or website, they disproportionately choose round numbers — like $ 5, $ 10 or $ 20 — far more than would be predicted by chance alone. One could argue that this is due to the rejection of change, a reluctance to waste time on small change, and the unwillingness to bother with complex mathematics. However, even in cases where the exact bill is not an issue (e.g., cashless card payments), the preference remains. For example, diners faced with a non-round bill (for example $ 34.67) are more likely to give non-round tips ($ 15.33), but only so that the total is a neat round number ($ 50). Why do we prefer round prices? And what is the psychology behind it? 1) Cognitive simplicity: The human mind is programmed to simplify and seek simplicity. Numbers like 10, 50, or 100 inherently feel “cleaner” and less chaotic than 17, 62, or 84. This desire for neatness gives us a sense of accomplishment. 2) Perception of quality: The marketing world has long capitalized on this preference for round numbers. Brands strategically associate round prices with premium quality. On the other hand, odd prices like “29.99” or “34.99,” while ubiquitous, subconsciously signal here's a discount or a bargain. 3) This preference is not limited to prices. People exhibit this tendency to round in other aspects of life as well. Our repeated exposure to round numbers is common in a variety of contexts, both in everyday life and during financial transactions, which contributes to an unconscious bias toward them. This cognitive ease with round numbers further perpetuates the preference. The stock market’s behavior and its fluctuations around these significant, round numbers is not a coincidence in general; there is a psychological explanation. Market Psychology of Round Numbers When the market reaches round numbers such as 500 or 1,000, 2,500 or 5,000, 10,000 or 20,000, it attracts the attention of both active traders and casual investors who may not even be actively following the market. As in everyday life, people often use round numbers as thresholds for making investment decisions. For example, some may decide to enter the market if a major index such as the Nasdaq-100 has exceeded 10,000, or they may decide to sell some of their stocks if the Nasdaq-100 has reached 20,000. These round numbers act as magnets for sellers as they mark important milestones given the relatively high rarity of a round number. If the market has the potential to move higher, it first needs to absorb the selling pressure around the round numbers and establish equilibrium before continuing its move higher. If we analyze the market behavior over the last decades, we will see clear patterns at round numbers. Let us take a closer look at a few examples. 1) Indian Stock Index, Sensex BSE:SENSEX Sensex, one of the major market indices in India, has its share of round number syndrome. For example, when Sensex reached 10,000 points in Q1 2006, it experienced significant market activity, with the index fluctuating by as much as 30 percent in Q2. The same phenomenon occurred at multiples of 10,000. Thus, at 20,000 points, which the Indian market reached at the end of 2007, the index collapsed by more than 60 percent over the next 4 quarters of 2008. Later the 20,000 mark has been reached again in the second half of 2010, and the index again suffered a decline of more than 20 percent during 2011. Later Indian stock market index reached the 30,000 mark in the first quarter of 2015, and its led to a price decline of more than 20 percent in the next 4 quarters, while 40,000 mark in the fourth quarter of 2019 - led to the market decline by 30 percent on the wave of COVID-19 sales. 2) Gold market OANDA:XAUUSD As in the previous example, round numbers often become key points of congestion for Gold market, when the market tries to break even higher, but the forces of buyers and sellers may be unequal. For example, spot Gold reached the $ 1,000 mark for the first time in the Q1 2008, which, following the logic discussed above, led to sales and 30 percent decrease. Gold spot buyers have tried a lot to reach $ 2,000 mark in 2011, but it brought the market down by 45 percent over the next 5 years. There were also a lot of unsuccessful attempts to jump above $ 2,000 in 2020-2022. Finally Gold spot surged above $ 2,000 only in Q4 2023, its led to further price increase, up to 2500 US dollars per ounce. 3) US stock index, Nasdaq-100 index NASDAQ:NDX The Nasdaq-100 index approached the 10,000 point mark for the first time in Q1 2020, which could have contributed to the sell-off. In fact, this is what happened, as the market then plunged by more than 30 percent in March 2020, and only thanks to monetary support measures and the reduction of US interest rates to almost zero, the index was able to break the 10,000 barrier by the end of Q2 2020. Reaching the 20,000 mark by the market index in Q2 2024, as we see, again leads to increased turbulence in US tech stocks and talk of imminent monetary easing by the Fed. Final Thoughts 1) It is important to note that round number syndrome and increased seismic activity near rounds number is a short-term phenomenon. Once the selling pressure is absorbed, the market resumes its movement based on other factors and develops independently of these already passed milestones. 2) Understanding the market behavior at round numbers can provide valuable information to investors. These round numbers act as psychological triggers for investors, driving their decision-making processes. 3) Understanding this phenomenon allows investors to make more informed choices and understand the short-term fluctuations that occur during these stages.
NASDAQ:NDXEducation
by Pandorra
NASDAQ 100 (NAS100)If the Federal Reserve decides to implement a 50 basis point cut, it can often lead to a positive market reaction, particularly in technology-focused indices like the NASDAQ 100 (NAS100). However, predicting the exact magnitude of the movement is challenging as it can vary based on various factors, including:1. **Market Sentiment**: If the market perceives the rate cut as a strong signal of support for economic growth, NAS100 could see a notable rally. 2. **Investor Reactions**: Traders might react differently based on their expectations before the announcement. If the cut was anticipated, the immediate reaction might be muted, as much of the effect could have already been priced in. 3. **Additional Factors**: Other influences such as earnings reports from tech companies, inflation data, or global economic conditions can also affect how NAS100 responds post-announcement. In general, historically, significant rate cuts have led to positive movements in indices like the NAS100, potentially allowing for gains in the range of 1-3% on the day of the announcement. However, actual outcomes will depend on the factors mentioned above and cannot be guaranteed. It’s always wise to consider volatility and other market conditions when investing.
OANDA:NAS100USDLong
by US30EMPIRE
Nasdaq Edges Higher Ahead of U.S Retail Sales Data &FOMC MeetingNasdaq Edges Higher Ahead of U.S. Retail Sales Data and FOMC Meeting The price is expected to maintain its bullish trend towards 19,690 as the initial target. Stability above 19,690 will further support an upward move towards 19,970 and beyond. Conversely, a break below 19,370 would indicate a downward trend towards 19,160. Key Levels: Pivot Point: 19535 Resistance Levels: 19690, 19970, 20120 Support Levels: 19370, 19160, 18920 Expected Trading Range Today: 19370 to 19970 Trend: Bullish while above 19,520
OANDA:NAS100USDLong
by SroshMayi
NAS100USD / KEY LEVEL 19,954 - 4HNAS100USD / 4H TIME FRAME HELLO TRADERS Tendency , prices trading below 19,954 , it indicates under downward pressure Prices are expected to remain under bearish pressure as long as they trade below the key levels of 19,954 and 19,535. Should the price stabilize and remain below these thresholds, a decline towards 19,187 is anticipated. A breach below this point could signal a further drop to 18,688. On the other hand, if the resistance at 19,954 is broken, we could witness upward momentum, with prices potentially rising first to 20,194 and then extending to 20,714. UPWARD TARGET : 20,194 , 20,714. DOWNWARD TARGET : 19,187 , 18,688.
OANDA:NAS100USDShort
by ArinaKarayi
“Nasdaq's Target is 19,500”Today, there is an expectation of a 25 basis point rate cut in the Fed meeting. By the end of the year, a total rate cut of 100 basis points is almost certain. This situation leads to a positive risk appetite being effective on the indices. On the U.S. side, retail sales increased by 0.1%. Meanwhile, industrial production in the U.S. pointed to a positivity exceeding expectations with a 0.8% rise. Technically, if the resistance level at 19,500 is permanently surpassed, the rise could gain momentum towards the 19,700 and then 19,950 resistance levels. On the downside, if the index falls below the 19,100 level, a pullback towards the support levels at 18,800 and then 18,450 might be seen.
NASDAQ:NDX
by primequotes
NASDAQ coiling ahead of downtrend resistance In the lead-up to tomorrow FOMC meeting, and driven by various dovish news reports, the interest rate market is pricing in 40bp of cuts —raising the odds considerably of a 50bp rate cut tomorrow. The basis for this is it would be improbable for the #Fed to allow pricing to move so far towards a 50bp cut only to let markets down with a 25bp cut, risking a repeat of the vicious sell-off viewed in early August. The #NASDAQ100 's impressive rebound from the early September 18,400 low has it up nudging up against downtrend resistance at 19,600/620, which comes from the July high of 20,690. A sustained break above 19,600/20 would signal that the correction from the 20,690 high is complete and that the uptrend has resumed towards 20,690 and then 21,500. Conversely, a failure to see a sustained break above 19,600/20 would warn that the correction is set for another leg lower towards the 200-day moving average at 18,200.
NASDAQ:NDX
by IG_com