Nasdaq 100: Futures largely undo yesterday’s small gains

Data disappoints; rate cut likelihoods still optimistic

A calm session when it came to the stock market yesterday with small gains for key US equity indices that carried with it nice implications for both the S&P 500 and Dow 30 each enjoying a record close. But in percentage terms they were bested by the tech-heavy Nasdaq 100, as sector performance by the close put the tech sector near the top. ‘AI engine’ Nvidia enjoyed strong gains, its share price finishing nearly 4% higher.

Economic data out of the US showed CB’s (Conference Board) Consumer Confidence worsen and a clear miss with its headline print falling from (a revised) 105.6 to 98.7 in what was its largest one-month drop in years. Other data included the Richmond Fed's manufacturing index worsening to -21 from -19, and housing prices for July up 0.1% m/m a slight miss. Market pricing (CME’s FedWatch) of future rate cuts out of the Federal Reserve (Fed) remain optimistic and via majority anticipate another 50bp (basis point) cut from their next meeting in November.

More housing data, another FOMC member speaks

Up next, more housing data with the weekly mortgage applications and new home sales for the month of August, else another FOMC (Federal Open Market Committee) member speaks after the Fed's Bowman spoke yesterday saying she still sees "greater risks to price stability". It gets busier tomorrow with a plethora of data and Fed Chairman Powell speaking, the day after pricing data for the month of August.

Nasdaq 100 Technical analysis, overview, strategies, and levels

Key technical indicators on the daily time frame are mixed to positive, with price above all its main daily moving averages (whether looking at short-term daily MA’s or longer-term ones), not far off the upper end of the Bollinger band, on the DMI (Directional Movement Index) front positive with a decent margin for its +DI over its -ID, and an ADX (Average Directional Movement Index) still not in trending territory. Its RSI (Relative Strength Index) hasn’t reached overbought territory.

Classifying the technical overview in its current state remains a tricky one given price-indicator proximity and historic technical context that shows price as unsettling, and yet it’s been mostly oscillatory intraday moves with the occasional shift to a new zone, in plenty of sessions lacking a play for both conformist and contrarian strategies as price fails quite often to get to its main 1^st levels. A drop in intraday ranges means technical levels will automatically narrow as time progresses and raises alarm bells for when intraday volatility does indeed pick up. For now, breakout strategies remain in the conformist camp while reversal strategies are for contrarians.

IG client* and CoT** sentiment for the Nasdaq 100

After five weeks in a row of net long bias increases among CoT speculators, we finally got a drop in the most recent report, from 63% to 59% on a drop in long positions (by 2,452 lots) and a simultaneous increase in shorts (by 4,379), though this wouldn’t be the first time in recent history they’ve positioned against price gains. As for IG clients, they shifted to majority sell last Friday, and since then have raised their short bias to 56% as of this morning.

Nasdaq 100 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 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.