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Nasdaq 100 forecast for 2022:Will stocks recover?

The Nasdaq-100 is a stock market index made up of 102 equity securities issued by 101 of the largest non-financial companies listed on the Nasdaq stock exchange. It is a modified capitalization-weighted index. The Nasdaq 100 index’s biggest components, as of 20 June, include Apple (AAPL), Microsoft (MSFT), Amazon (AMZN), Tesla (TSLA) and Alphabet (GOOGL), with stocks weighted in proportion to their market capitalisation.The index set highs above the 4,700 level at the peak of the dot-com bubble in 2000, but fell 78% during the Stock market downturn of 2002.As of 20 June, the index has lost 32.2% year-to-date. Recent falls have seen a number of companies languish near the bottom of their 52-week ranges, with names like Netflix (NFLX) and Okta Inc (OKTA) losing more than half of their value in the last five months.In the last 12 months, the five worst performers in the index were tech stocks. The recent struggles of Netflix (NFLX) emphasised a sudden shift in investor confidence for tech. 

The NASDAQ-100 is a modified capitalization-weighted index. This particular methodology was created in 1998 in advance of the creation of the NASDAQ-100 Index Trust, which holds portions of all NASDAQ-100 firms. The new methodology allowed NASDAQ to reduce the influence of the largest companies and to allow for more diversification. However, the weights of the stocks were not changed after that, which led to more problems. In May 2011, NASDAQ did a major rebalance of the index to bring it closer to market-cap weighting.

Composite Financial Analysis for NASDAQ

  • We do not include potential future debt issuances as a source of liquidity because of the uncertainty of a company's ability to access debt markets in times of financial stress, even for investment-grade issuers.
  • When assessing strong or exceptional liquidity, we include all forecasted capital expenditures over the next 24 months, including discretionary growth capital spending.
  • For exceptional and strong liquidity assessments, we characterize standing in the credit markets as generally high, and for adequate liquidity, we view standing in the credit markets as satisfactory.
  • If a company has a credit put that causes debt acceleration or collateral posting due to a downgrade of three notches or less, we would include these requirements under uses of liquidity, per paragraph 30 of the liquidity criteria. For example, if a 'BBB' rated company had a credit put that was triggered with a downgrade to speculative grade, we would include the corresponding cash requirement under uses of liquidity.
  • Larger, investment-grade issuers that have access to both public and private debt markets have greater flexibility than companies that depend solely on private bank loans. In addition, we consider whether a company can borrow on an unsecured basis, has access to the commercial paper markets, and issues debt in multiple geographies.

Nasdaq 100 forecast for 2022:Will stocks recover?

x axis:Likelihood %
y axis:Potential Impact %
z axis:Color (yellow to green) Technical Analysis %

AC Investment Research

In our experiment, we focus on an approach known as Decision making using game theory. We apply principles from game theory to model the relationships between rating actions, news, market signals and decision making.

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