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Nasdaq 100: Futures show small gains after a session of losses


MongiIG

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Retail traders’ majority sell sentiment drops out of heavy short territory, while CoT speculators shift to the middle from a previous slight buy bias.

 

original-size.webpSource: Bloomberg

 

Written by: Monte Safieddine | Market analyst, Dubai
 
Publication date: 

Tech sector retreats; Tesla suffers a downgrade

Most sectors managed to end yesterday's session in the green, yet tech found itself leading the pack in the red this time. While consumer discretionary experienced limited losses and communication saw modest gains, the overall result was a downturn for the tech-heavy Nasdaq 100. In percentage terms, it suffered more than the S&P 500 and contrasted sharply with the Dow 30's positive finish. Closing performance highlighted a decline in Nvidia's share price, partially undoing Tuesday's impressive gains, with Tesla facing even larger losses following a downgrade by Wells Fargo.

The US offered little in terms of economic data yesterday, though the weekly mortgage applications, reported by the MBA, showed a notable increase of 7.1%. However, the economic calendar is set to become busier later today with the release of producer prices and retail sales for February, alongside the weekly claims and January's business inventories.

Treasury yields ended the session higher, reflecting positively in real terms after a strong 30-year auction (following the previous night's disappointing 10-year auction). Market pricing (CME's FedWatch) continues to indicate a hold-hold-cut trajectory for the Federal Reserve's meetings in March, May, and June.

Nasdaq Technical analysis, overview, strategies, and levels

The Nasdaq's previous first Support level held firm on several occasions, ultimately benefiting conformist buy-after-significant reversal strategies as the key level was maintained, providing more advantage than contrarian sell-breakout strategies. Despite yesterday's movements, the Nasdaq's 'bull average' technical overview remains intact. However, price-indicator proximity on the daily timeframe has led to a few at-risk technical indicators adjusting somewhat effortlessly.

 

original-size.webpSource: IG

IG client and CoT sentiment for the Nasdaq

In terms of sentiment, retail traders have moved away from a heavy sell stance, with shorts capitalising on yesterday's price drop to decrease their sell bias to 61% from 66% in the morning. The shift is particularly significant among institutional traders, as CoT speculators moved from a slight buy bias of 54% to a neutral stance in the latest report released last Friday. This marks the first instance of a net sell bias among them since October of the previous year.

 

original-size.webpSource: IG

Nasdaq chart with retail and institutional sentiment

 

original-size.webpSource: IG

 

  • *The percentage of IG client accounts with positions in this market that are currently long or short. Calculated to the nearest 1%, as of today morning 8am for the outer circle. Inner circle is from the previous trading day.
  • **CoT sentiment taken from the CFTC’s Commitment of Traders report, outer circle is latest report released on Friday with the positions as of last Tuesday, inner circle from the report prior.

 

 

This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

 

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