Nasdaq 100: streak of gains come to an end

Sector let-down

All sectors finished yesterday's session in the red, with consumer staples hit the hardest. Consumer discretionary was not far off, while information technology landed near the middle, and communication hardly changed. In summary, it was a red session for the tech-heavy Nasdaq 100 (US Tech 100 on IG’s trading app and platform), with losses larger than both the Dow 30 and S&P 500 in percentage terms. This put an end to successive gains, though it is yet to translate into derailing what have been strong positive technicals in both daily and weekly time frames.

As for treasury yields, they finished the session lower, experiencing a drop in real terms as well, despite a disappointing 20-year auction. Market pricing (CME's FedWatch) suggests a heavier majority on the first cut out of the US Federal Reserve (Fed) occurring in March and falling beneath 4% by the end of 2024.

In central bank speak, there was the Fed’s Harker emphasizing the importance of moving “rates down,” but he added that “we don’t have to do it too fast.” More importantly, he stated, “we’re not going to do it right away; it’s going to take some time.”

Incoming impacting US data

There was more housing data out of the US to digest, the weekly mortgage applications down 1.5% and existing home sales for November rising in a beat. CB's consumer confidence jumped to over 110. New home sales will be released tomorrow, but we've got other items that will take the attention; both then with personal consumption expenditures (PCE) price index and University of Michigan’s (UoM) revised readings that hopefully show the drop in consumer inflation expectations in its preliminary readings stick. As for today, there’s gross domestic product (GDP) for the third quarter, where it’s been a story of strong growth (according to advance and preliminary figures), as well as the weekly claims.

Nasdaq technical analysis, overview, strategies, and levels

The pullback in price went past its previous daily first support level, with its second support managing to hold, finally taking out even cautious conformist buy-after-significant reversals, and giving contrarian sell-breakouts a session of follow-through. Looking at the technical overview, it hasn’t shifted just yet from ‘bull average’, price no longer above all its main short-term moving averages, but other key technical indicators still positive and in turn will require more for its overview to be undone, especially if price manages to remain within its bull channel.

IG client* and CoT** sentiment for the Nasdaq

As for sentiment amongst retail traders, a pullback in price usually results in a drop in sell bias as shorts close out and longs initiate, but we didn’t see that here this time around. They’ve pushed further into heavy short territory to 69% this morning from 67% yesterday. CoT speculators according to last Friday’s report still prefer to hold onto majority buy bias, and emerged from slight long territory.

Nasdaq chart with retail and institutional sentiment

• _{*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 6:30am Dubai time 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.}