Nasdaq 100: Futures steady ahead of the FOMC event

Retail sales still growing as data mostly improves

Economic data out of the US showed retail sales growth for the month of August with an increase of 0.1% month-on-month (m/m), its previous reading revised higher as well, and besting forecasts of a contraction. Its core was up by the same amount and a slight miss but in all didn’t negate from what have been mostly better readings out of the world’s largest economy. Industrial production for the same month was up a healthier 0.8%, capacity utilization a couple notches higher at 78%, while business inventories for July was slightly worse than anticipated up 0.4%. For the housing sector, NAHB’s housing market index for this month improved from 39 to 41 though is still in territory considered a negative outlook.

But none of it seemed to dent markets much with key US equity indices holding and little change by the close, both Dow 30 and S&P 500 enjoying fresh intraday highs. Sector performance by the close put energy and consumer discretionary on top while defensives struggled and finished lower.

More data up next but focus will be on FOMC

Up next, we’ve got more housing data with the weekly mortgage applications, as well as both building permits and housing starts for the month of August. But expect market participants to remain fixated on what happens after with the Federal Open Market Committee’s (FOMC) decision regarding interest rates, and market pricing (CME’s FedWatch) via two-thirds majority anticipating a larger 50bp (basis point) reduction.

Nasdaq 100 Technical analysis, overview, strategies, and levels

Key technical indicators on the daily time frame are largely neutral with recent oscillations helping it remain that way, with price (for a few, only just) above its main short and long-term daily moving averages, on the DMI (Directional Movement Index) front the -DI and +DI too close for comfort, an ADX (Average Directional Movement Index) falling further into non-trending territory, the RSI (Relative Strength Index) not getting close to overbought nor oversold territory, and not far off the middle of what have been narrowing Bollinger bands.

Based on those key technical indicators alone and it’s a consolidatory overview with a touch of positive technical bias, but an overview that has yet to shift from ‘consolidation – volatile’ owing to historic technical considerations. One could take tonight’s fundamental event into consideration given its capacity to render levels of less value and make breakouts easier, so far still belonging to the conformist camp while reversals are reserved for contrarians.

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

CoT speculators are moving away from the middle in the tech-heavy index and not far off heavy buy territory with an increase in longs (by 1,059 lots) outdoing the rise in shorts (by 487), taking it to 63% according to the latest report.

As for IG clients, they’ve opted to remain near the middle as of late with the bias among them dropping a notch to a slight buy 51% as of this morning, but any sizable moves here on out that is preceded by narrow oscillations tempting range-trading could have larger percentage implications once a proper breakout does indeed occur.

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.