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Nasdaq 100: futures up after a session of limited gains


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Technical overview continues to struggle on the daily time frame even as it matches the weekly’s ‘bull average’, while traders both large and small are in majority short territory.

 

original-size.webpSource: Bloomberg

 

 

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

FOMC commentary and rate cut speculations

There was plenty of FOMC (Federal Open Market Committee) members speaking. The attention was largely on Chairman Powell. He did not stick to a timeline on rate cuts, stating it's "too soon to say whether the recent readings represent more than just a bump" when referring to inflation. Bostic mentioned a potential rate cut, but only in the fourth quarter of this year. Kugler expects the disinflationary path to continue but did not specify when the first interest rate reduction in the current cycle would start. Barr commented on the resilience of the banking system.

Economic data and market reactions

Market pricing (CME's FedWatch) doesn’t need much to no longer anticipate a rate cut this June. It is pricing in fewer cuts next year, aiding the ‘higher for longer’ narrative. As for Treasury yields, they finished the session little changed but edged higher on the further end and slightly so in real terms. Breakeven inflation rates are holding at/near recent higher levels.

Economic data out of the US showed the services PMI (Purchasing Managers’ Index) for March was a miss, dropping to 51.4. It remains in expansionary territory according to ISM (Institute for Supply Management). Its employment component is still sub-50. New orders dropped to 54.4, and prices paid decreased from 58.6 to 53.4. S&P Global's survey held at 51.7.

Before this, ADP's non-farm estimate showed growth of 184K for March, besting forecasts. This comes prior to tomorrow's market-moving Non-Farm Payrolls reading, expected to be around 200K. As for today, the focus is on the weekly claims and trade data for February. More FOMC members are speaking today and tomorrow.

Wall Street: winners, losers, and surprise moves

Sector performance by the close put communication on top. There were small gains for both consumer discretionary and tech. The results were not necessarily strong but helped the tech-heavy Nasdaq 100 (US Tech 100 on IG’s trading app and platform) avoid a red finish. This contrasted with the Dow 30, and in percentage terms, Nasdaq did better than the S&P 500.

Component performance by the close put Intel at the very bottom, with foundry business losses mounting. At the top was Micron Technology, with Warner Bros Discovery and Netflix not far off. In a session where (non-component) Disney was in retreat, this occurred after Peltz's Trian Partners failed to get a seat on the company's board.

Nasdaq technical analysis, overview, strategies, and levels

When it comes to its price action, it lacked a play yesterday. The intraday highs and lows were within Wednesday’s 1st levels, keeping both conformist and contrarian strategies at bay. Key technical indicators are mostly neutral in the daily time frame. They are largely positive on the weekly. Price action within a positive channel has kept its overview ‘bull average’. Here, buying on dips comes with caution for those in the conformist camp.

 

original-size.webpSource: IG

IG client and CoT sentiment for the Nasdaq

As for sentiment, slight price gains have naturally taken the retail traders' majority sell bias slightly higher, to 59% this morning from 57% yesterday. They continue to hold a significant short position in both the S&P 500 (at 68%) and the Dow 30 (at 65%).

CoT speculators recently shifted from a slight buy at 54% to a slight sell at 53%, according to last Friday’s report, where positioning is as of last Tuesday. We’ll get the latest figures tomorrow to see whether they’ve opted to remain in majority short territory.

 

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 6am 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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