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10/06/21 10:53
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The Nasdaq’s gains are starkly contrasted with relatively weak performances this year from US index peers the S&P 500 and Dow Jones Industrial Average (Wall Street 30), suggesting some sector rotation has occurred. Source: Bloomberg Indices Nasdaq-100 S&P 500 Dow Jones Industrial Average Nasdaq Technical analysis Shaun Murison | Senior Market Analyst, Johannesburg | Publication date: Monday 20 March 2023 The Nasdaq 100 index, after being out of favour in 2022, has managed to produce double digit price gains within the first quarter of 2023. These gains are starkly contrasted with relatively weak performances this year from US index peers the S&P 500 and Dow Jones Industrial Average (Wall Street 30). The failure of smaller financial counters Silvergate, First Republic and Silicon Valley Banks, has sparked fears around a mini banking crisis prompting weakness in larger banking peers which make up some of the S&P 500 and Dow Jones Industrial index constituents. In turn there is a suggestion that we are now seeing some sector rotation by investors back into technology stocks found within the Nasdaq 100 index. Relative strength comparison: Nasdaq 100 vs S&P 500 Source: IG The chart above shows a ratio comparison of the Nasdaq 100 (numerator) and the S&P500 (denominator) from the beginning of 2022 up until now (20 March 2023). The red trend line (arrow) highlights the downtrend in this ratio which reflects a significant underperformance of the Nasdaq against the S&P500 in 2022. The blue arrow highlights the upward trend of this ratio which began in early 2023. The upward trend now prevalent, highlights the Nasdaq 100’s outperformance of the S&P 500. Relative strength comparison: Nasdaq 100 vs Dow Jones Industrial Average Source: IG Similarly, to our previous chart (Nasdaq100 / SP500) the above chart of the Nasdaq 100 (numerator) and Dow Jones Industrial Average (denominator) ratio highlights these same trends, i.e. in 2022 Nasdaq 100 consistently underperformed the Dow, while in 2023 that trend appears to have reversed. Year to date index moves compared Source: IG Albeit from a lower base, the Nasdaq 100 has outperformed its benchmark peers the S&P500 and Dow Jones Industrial Average significantly in 2023. Nasdaq 100 – Technical analysis Source: IG As highlighted in a previous article, the 50-day simple moving average (50MA) (green line) has recently crossed above the 200-day simple moving average (200MA) (blue line). This moving average crossover is commonly referred to as the ‘golden cross’ in technical analysis terms. The suggestion is that it marks the beginning of a new longer-term uptrend in a market, in this case the Nasdaq 100. While we have seen some short-term gains to follow in the index, the Nasdaq 100 does now also trade in overbought territory. The overbought signal suggests that trend followers looking for long entry might be afforded an opportunity to do so through either a near term price pullback or sideways consolidation. Source: IG The price break above resistance at 12350, now sees this level as possible support, should a pullback ensue. Traders supporting the long-term uptrend might look for long entry on a pullback to either this level or trend line (solid black line) support. Preferably a pullback would need to end with a bullish reversal (candle) pattern. In this scenario, 12900 and 13190 provide initial resistance targets, while a close below the reversal low might be used as a stop loss indication for the trade. -
FTSE 100 weakens but DAX and Nasdaq 100 futures move up in early trading Indices faltered after the Fed last night, and remain mixed this morning, but the DAX and the Nasdaq 100 are looking more positive. Source: Bloomberg Chris Beauchamp | Chief Market Analyst, London | Publication date: Thursday 23 March 2023 FTSE 100 struggles to move higher After surging on Tuesday, the price dropped back slightly yesterday, and it has edged down in early trading from overnight highs. The index is still firmly up on the lows from Monday, so some consolidation is not surprising. It would need a move back below the 200-day simple moving average (SMA) to suggest a more sustained period of weakness that could see Monday’s lows tested once again. Conversely, a bounce back above 7580 would hand the buyers the advantage and suggest a further recovery that might result in an eventual move back to the February highs. Source: ProRealTime DAX claws back Wednesday losses Similarly, this index faltered at the 50-day SMA yesterday, but given it has rallied 900 points from the lows this short-term period of indecision is not surprising. A revival above the 50-day SMA would mean that the buyers have reasserted control and that a move back to the March highs is back in play. The pullback of the past two weeks does suggest a higher low has been formed. Thus it would need a move back below 14,400 to really suggest that the sellers are back in control, with a drop below 14,600 indicating that the outlook has shifted to neutral in the short-term. Source: ProRealTime Nasdaq 100 pushes off overnight lows The index continues to be the best of the bunch on Wall Street, rallying back to the February highs this week. An initial move above 12,900 and towards 13,000 last night in the wake of the Fed was beaten back, but the bounce is intact, after the recovery from the 200-day SMA last week. Now the index needs a daily close above 13,000 to signal that a break to the upside has occurred, which would then put a move to the August highs around 13,7000 into play. Source: ProRealTime
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Outlook on Brent crude oil, gold and natural gas post Fed rate hike Outlook on Brent, gold and natural gas following Wednesday’s widely expected 25-basis point Fed rate hike. Source: Bloomberg Axel Rudolph FSTA | Senior Financial Analyst, London | Publication date: Thursday 23 March 2023 Brent crude oil recovery likely has further to go Brent crude oil has risen for three consecutive days despite losing upside momentum on Wednesday afternoon when the Energy Information Administration (EIA) report for the week ending 17 March showed that US crude inventories unexpectedly expanded by 1.1 million barrels to the highest level since May 2021. The Brent crude oil chart remains bullish on the outlook for top crude importer China which according to a recent report is expected to drive a two million barrel rise in daily global oil demand this year and as Russia’s Deputy Prime Minister Alexander Novak said the country has decided to keep its output at a reduced level through June. Were Wednesday’s high at $76.85 to be exceeded, the January trough at $77.65 would be next in line, followed by the February low at $79.04, both of which are likely to act as resistance, at least in the short-term. Minor support comes in around the $75.00 mark and at Monday’s $73.71 high. Source: ProRealTime Gold rallies on a weaker US dollar Gold’s short-term retracement lower from last week’s one-year high at $2,009 per troy ounce to Wednesday’s $1,935 low was followed by another up leg as the Federal Reserve (Fed) hiked its rates by a widely expected 25-basis points, taking the fed funds to 4.75% to 5.00% and pushing the greenback lower whilst lifting the price of the precious metal. Treasury Secretary Janet Yellen’s statement to lawmakers that the US government was not considering a “blanket insurance” for bank deposits provoked a bearish reversal in US equity markets which gave the gold price a further boost with it so far having risen to $1,983. Further up lurks the psychological $2,000 mark and Monday’s high at $2,009, a rise above which would eye the all-time high at $2,070 reached in March 2022. Minor support remains to be seen at the $1,959 February peak and further support at Wednesday’s $1,935 low, an unexpected fall through which, for today at least, would target the 13 March high at $1,914. Source: ProRealTime US natural gas futures continue to slide US natural gas futures are slipping further towards their $2.105 late February low on forecasts for milder weather and as the EIA expects 2.4% less US natural gas consumption in 2023 than in 2022. US natural gas prices dropped by around 75% from their $9.977 August 2022 peak but are currently trying to find support around the 2021 low at $2.264, having earlier this week dipped to $2.216. If slipped through, the February low at $2.105 will be back in focus below which lies the psychological $2.000 mark. Resistance can be spotted around the $2.362 early February low and between the mid-March lows at $2.455 to $2.457. Source: ProRealTime
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