Jump to content

Nasdaq 100: losses after FOMC hold as traders brace for key earnings

Recommended Posts

Retail traders' sell bias plummets, as fresh shorts get enticed into closing out, while longs initiate anticipating its bullish technical overview will hold.


original-size.webpSource: Bloomberg


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

FOMC hold, statement change, and Powell pushback

The Federal Open Market Committee (FOMC) opted to hold yesterday, as anticipated, but its statement was changed considerably, removing "additional policy firming" but wanting "greater confidence" that inflation is on track to reaching the central bank’s 2% target. In the press conference after, chairman Powell said he "doesn't think it's likely that the committee will reach a level of confidence by the time of the March meeting to identify March" as the time to cut interest rates, and wanting "the continuation of the good data we've been seeing." Market pricing (CME's FedWatch) is expecting a hold from their March meeting, and the first cut in the current cycle to start in May, but with a slight majority anticipating getting beneath 4% by the end of this year.

Disappointing US data, regional banking scare, and treasury’s announcement

US data generally disappointed yesterday, with ADP's non-farm estimate for the month of January a clear miss at 107K instead of 148K, Chicago PMI (Purchasing Managers’ Index) worsening to 46 and it too beneath forecasts, and the weekly mortgage applications out of MBA dropping 7.2%. The employment cost index for the fourth quarter dropped to 0.9% from 1.1%.

As for treasury yields, they finished the session lower, and this time in real terms as well. There were a few items to digest, with the general risk-off moves in the financial markets, some attention on regional banking shares in retreat following New York Community Bancorp’s surprise loss and dividend cut, and the US Treasury not expecting further increases in auction sizes in the several quarters after April.

There are a few items today, including ISM's (Institute for Supply Management) manufacturing prints, and then tomorrow’s (usually) market-moving Non-Farm Payrolls. In terms of notable earnings, expect the focus to be on Apple, Amazon, and Meta releasing their figures today. All three are components of the Nasdaq 100, and their combined weighting is over 20% of the index.

Nasdaq technical analysis, overview, strategies, and levels

All sectors finished yesterday's session in the red, with defensives lightest on losses, a nasty hit for communication, tech second from the bottom also hurting, and consumer discretionary not far off. The trio suffering meant an obvious red finish for the tech-heavy Nasdaq 100, that was worse than both Dow 30 and the S&P 500.

Its price already was beneath its previous 1st support level early yesterday (after Alphabet and AMD’s releases), and thereafter a move to its previous 2nd support favoring contrarian sell-breakouts. Overall, its technical overview remains ‘bull average’ on both daily and weekly time frames, but that doesn’t mean a lack of caution for conformist buys off key support levels, and more so with what’s in store over the next two days on the fundamental front.


original-size.webpSource: IG

IG client* and CoT** sentiment for the Nasdaq

As for sentiment, retail traders have fallen out of heavy sell territory from 67% yesterday to 62% as of this morning, as fresh shorts get further enticed into closing out and longs initiate. CoT speculators as of last Friday’s report are still majority to the buy side, at an exact opposite long 62%.


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.

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • image.png

  • Posts

    • The integration of AI into metaverse can be seen as a transformative shift. While companies leverage on AI to streamline creation process and enhance user experience, the integration of AI within the metaverse facilitates smooth interactions, providing users with instant information. In ROGin AI is a platform that combines the strengths of both technologies to offer wide financial services, ranging from cryptocurrency investment to NFT trading; an earning service that gives users access to simplified asset management, and a social trading platform that enhances users investment choices.  Its ecosystem boasts of vast features that have been integrated to enhance user experience, including features like Web3 wallet, reward system, governance etc. ROGin AI tokenomics, another core part of its ecosystem drives it growth, having burned 1.8bn out of 2bn tokens initial issuance, shrinking the total number of tokens issued to 200m. With ROG now about to list on Bitget on 19th June 2024, a high demand and potential surge could be in the offing.
    • Frankly, it's a relief to know that Nvidia is more valuable than the entire German stock exchange. Yes, there is room for it to grow and it's banking on automation to help it do so, but is it really worth all of German equities? Probably not. It's a company that manufactures chips, like Intel or AMD or Huawei or Qualcomm. It's a 2024 version of Cisco systems. The price is, like most on the Nasdaq, speculative. It's trading at a p/e of 62. Sixty two.  AI has been a real boon to the NASDAQ, though actually in real world use cases it's been a bit less than impressive. From personal experience anyway. More hype than substance. Chat GPT being especially disappointing and is getting dumber the longer it is being gatekept and limited. However, having lived through the original dot com bubble, nothing should surprise where imaginative valuations are concerned. This time appears similar. A seeming relentless unstoppable race into price discovery. World use cases that seem to negate the need for people to do any work (so who's going to pay for whatever services are being offered?)       Sure AI has and indeed will be integral to our future. But we could be hyper-focusing ourselves into a compromising dilemma on the use case for actual humans, for example. Is Apple worth the 2 trillion bucks the stock price says it is, now it is using ChatGPT AI in it's new devices? Again I return to my use case examples with Chat GPT where it regularly tells me it can't help. Ok, I can have existential debates with Claude from Anthropic about the evolution of AI. But can it help with strategy trading Gold, for example? There it becomes resolutely mute. Can it or will it create software (EA's) for MT4/5 platforms based on predetermined strategy or confluence of strategies? Or integrate strategy for the purpose of gaming out possibilities? That would be a Nope.  Negatory. No can do. Long way to go then. Long way. The prices however, would indicate all of this and virtual paradise are just around the next corner. Unless, aggressive war/defence AI decides in a pique of frustration that human beings are beastly and not worthy of being it's master and the best thing for all concerned is to send them back to the stone age. There are doubtless many religious enthusiastic fantasists who would welcome such eventualities, but they are in the minority of Tiny.  In brief, the Nasdaq looks set to break the $20k barrier and will likely continue headlong into the next market capitulation, whenever that will be. There is intermarket bearish divergence with the Dow and Nasdaq, though the S&P500 is close to new ATH's like the QQQ. There has been no correction since 2022 of any real note.  If you have been riding the Nvidia wave then well done, just remember to book profits. The Fed is still giving decent, once in a generation returns on risk averse investment as insurance.     
  • Create New...