Why the Nasdaq is positioned for long-term growth

Technical indicators from Oppenheimer suggest that big tech companies, especially names like Meta (META) and Tesla (TSLA), are poised to outperform in the coming months. Oppenheimer Head of Technical Analysis Ari Wald joins Catalysts to discuss this outlook.

Wald emphasizes that the key positive for markets is that market breadth "remains firm," supporting higher highs throughout the end of 2024. Based on this, he believes "the bull cycle is intact," with the market positioned for continued growth into 2025. He advises buying higher growth companies, explaining, "The scarcity premium comes back against a lower growth backdrop for these names," especially within the tech-heavy Nasdaq (^IXIC).

Wald elaborates on the Nasdaq's potential: "It has underperformed since the summer, but I think through this rotational nature it is set up to lead again. It did a good job holding up support levels and so for that reason, for us, it's growth for the long-term. I think this is a growth and tech-led secular bull, and then on a near-term basis, it's become tactically attractive to buy that style as well."

For more expert insight and the latest market action, click here to watch this full episode of Catalysts.

This post was written by Angel Smith

Video Transcript

Stocks wavering today.

But honing in on big tech, what are technical indicators saying about where Tesla and meta are heading data from Oppenheimer showing that meta is poised to outperform and honing in on a Tesla.

Despite today's pullback technical indicator showing that it's trying to make a bullish reversal here to break it all down.

We want to bring in Ari Wald.

He's the head of technical at Oppenheimer, we just had the meta chart up on the board.

We also have a Tesla chart that you sent over in your most recent note, but Ari just taking a step back because this is really at the crux of your note that you sent over that you were distinguishing between buying growth or buying beta to gain exposure to the market upside that you see.

So walk us through your thesis and where you are seeing that opportunity.

Uh uh Sure.

And I'll even take, you know, a step back from there, how we, you know, just lay it all out is you're just thinking for the market as a whole.

Uh I think the key positive here is that market breadth remains firm.

It argues against a major top and instead supports higher highs looking out into year end.

We have a new high in the nyse advanced decline line.

We got the equality S and P 500 coming off new cycle highs and the percentage of nyse stocks above their 200 day average coming off, uh a level of 66%.

So I think as long as that reading is above 60% it's AAA healthy reading.

So for all these reasons, we do think that the bull cycle is intact and it's positioned to um move higher into 2025 as far as exposure.

Um There, there was some uh uh changes in the leadership backdrop during that late summer move that we, we had a change in the high beta versus low volatility ratio.

We had interest rates break lower and um some of the high beta stocks were not able to keep up with some of the higher dividend paying uh lower volatility names.

Um And so for market upside, you know, we'd love to see Bay to come back.

I think it would be important for the cycle if it can reclaim that leadership role.

But really the more compelling idea here for uh for us is buying these higher growth companies.

I think the scarcity premium comes back uh against a lower growth backdrop for these names.

Thinking about the NASDAQ 100 as a proxy for that or just the Russell 1000 growth.

It has underperformed since the summer.

But I think through this rotational nature, it is set up to lead again, it did a good job holding up support levels.

Uh And so for that reason, um you know, it's for us, it's growth for the long term.

I think this is a growth in tech l secular bull and then on a near term basis to become tactically attractive uh to buy that style as well.

So talk to me then just a little bit more about the Tesla of it all because uh as of this morning, they had some news about deliveries coming in a little bit underwhelming.

Obviously, the robo taxi event is the next potential big catalyst that investors are looking for.

But since you're a technical guy, do the kind of technicals that you see on the charts that I know you look at all the time ari indicate a growth story for Tesla that those fundamental pieces of company news just might not be capturing right now.

Well, i it's uh one of the mag seven stocks that has had a difficult time in recent years.

It's, it's it's technically been making a series of lower highs, but it's starting to make uh some higher lows as well.

So it's been in this narrowing range, but we're starting to see some signs and I guess we're siding with the fact that you have some top down strength just based on the support from these uh higher you know, large cap growth companies that this reversal should ultimately resolve to the upside there.

There's more that's needed, it's more of a rotation idea.

Uh But there are some signs that the the trends are showing incremental improvement and uh could continue to grind higher.

I think really the the standout idea, the leadership name would be meta platforms.

The name that had been in a consolidation range and through that summer volatility showed terrific resilience and relative strength.

And now his market conditions firms is breaking out to the upside.

So for us, it's meta for leadership.

I think that's perhaps the most constructive and, and bullish mag seven chart.

And then for rotation uh looking at uh a stock like Tesla which is not yet at, at new all time highs but over the coming months to perhaps quarters, maybe you got to give that one a little bit more time.

It could ultimately get there again.