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Nasdaq 100: futures undo losses after Nvidia’s impressive earnings

Technicals have been struggling a bit more on the daily time frame, but it hasn’t disincentivized CoT speculators from their majority buy bias.

Source: Bloomberg

Nvidia's earnings, cautious FOMC minutes, and a little on data.

Heavyweight (and Nasdaq 100 component) Nvidia took the attention after the market close with its release, where it managed to easily best estimates on earnings per share at $5.16 vs. $4.64 expected, and revenue at $22.1bn vs. $20.6bn. It also expects $24bn of sales in the current quarter, which too is above forecasts. That translated into an after-hours surge in its share price and saw AI and semiconductor stocks rise. US equity index futures are showing gains that are undoing recent losses, and there is outperformance for the tech-heavy Nasdaq 100.

There were the minutes from the latest FOMC (Federal Open Market Committee) meeting to digest, and they showed most policymakers noting "the risks of moving too quickly to ease the stance of policy", that "the policy rate was likely at its peak" in the current cycle, and they wanted "greater confidence" on inflation falling back to its target "sustainably". Federal Reserve (Fed) member speak also came off as cautious, with Bowman saying that the time for rate cuts was "certainly not" now, and Bostic speaking earlier on the persistent price pressures based on the latest data.

Treasury yields finished the session higher, with some of those gains being undone as of writing this morning, and market pricing (CME's FedWatch) edging closer to fully pricing in a hold out of the Fed in March, and by a majority, anticipating the first rate cut in June.

Otherwise, there wasn't much to process in terms of data, with the weekly mortgage applications down again and by a harsher 10.6%, and the Redbook index up 3%. We’ve got plenty today, including preliminary PMIs (Purchasing Managers’ Index) and more Fed members speaking.

Nasdaq technical analysis, overview, strategies, and levels:

Its previous 1st Support level only just managed to hold with the intraday lows just above its S/L (stop loss), and moves thereafter that got volatile and are already beyond today's 1st and 2nd Resistance level, the gains largest for conformist buy-after-significant reversals off the 1st Support and further follow-through for conformist buy-breakouts off the 1st Resistance thereafter. The gains will need to stick to aid key technical indicators in the shorter term that were struggling, with the weekly time frame’s ‘bull average’ on a healthier footing.

Those looking to re-adjust the Relative Starting Point following the surge would translate into the 1st Resistance at 17,886 with its S/L at 17,954, 2nd Resistance at 18,022 with its S/L at 18,090, the 1st Support at 17,612 with its S/L at 17,544, and the 2nd Support at 17,476 with an S/L at 17,408. The overview and strategies for conformists and contrarians would be the same, though after the latest moves a bit more volatile for the current session processing the latest update.

Source: IG

IG client* and CoT** sentiment for the Nasdaq

As for sentiment, retail traders have reduced their majority short bias from 60% yesterday, to 57% as of this morning. CoT speculators are still majority buy and unchanged at 62% according to last Friday’s report

Source: IG

Nasdaq chart with retail and institutional sentiment

Source: 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.

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