May witnessed the Nasdaq 100 emerge as the chief catalyst propelling US indices to fresh heights, subsequently casting a positive aura across global markets. Tantalizingly close to breaching the 19,000 mark, the index surged by an impressive 11% from its low point on 19th April. A flurry of sell-offs ensued, chiseling away 2% from the index’s pinnacle. The burning question now looms – is the market on the cusp of an extended correction?

Technically, the Nasdaq 100 index hovers precariously at the brink of the overbought territory on the daily RSI. Contrary to its moniker, venturing into this realm often heralds heightened growth albeit cloaked in unpredictability.

The current bullish sentiment finds reinforcement in the index’s scant 1% divergence from its prior zenith. Following the previous peak, an April correction substantially assuaged the market’s transient feverishness.

The correction witnessed from July to October last year adheres to the archetypal Fibonacci blueprint, positioning the Nasdaq 100 index in proximity to 61.8% retracement of the initial rally and a whisker away from the crucial 200-day moving average. Conventionally, this phase should be trailed by a rally upwards to 161.8%, approximately 19200.

Alas, the Nasdaq 100 falls marginally short of a pivotal resistance juncture. Yet, it might opt to momentarily halt its surge to regroup before springing forth anew.

Unless a seismic shift in sentiment or a cataclysmic downturn in economic data unfolds, a prolonged descent in equity indices seems improbable. The recent spell of downturn emanated from fleeting profit-taking in response to robust macroeconomic indicators. While they hint at a probable tightening of monetary policy, it lacks the gravitas to herald a bearish epoch for equities.

However, a noteworthy caveat lies in breaching the preceding consolidation zone around 18300, which could potentially foreshadow a substantive trend reversal.