Nasdaq 100: Gains ahead of a plethora of US data

Record highs for the S&P 500 and Dow

Key US equity indices shrugged off tariff threats to finish higher with record closes for both S&P 500 and Dow, with a decent finish for the tech-heavy Nasdaq 100 as well as tech, communication and consumer discretionary put in solid finishes bested only by utilities.

Economic data out of the US showed CB’s consumer confidence improve to 111.7 roughly as anticipated, and for the housing sector showed new home sales in October drop to 0.61m and a clear miss compared to 0.73m expectations. Prices m/m (month-on-month) rose 0.7% in September hotter than anticipated (FHFA) while y/y (year-on-year) slowed to 4.6% (S&P/CS).

There was the release of minutes from the latest FOMC (Federal Open Market Committee) meeting where they cut rates by 25bp (basis points), policymakers seeing “it would likely be appropriate to move gradually toward a more neutral stance of policy over time” should “the data come in about as expected” where it has “generally remained consistent with inflation returning sustainably to 2 percent” and that there “was no sign of rapid deterioration in labor market conditions”. Market pricing (CME’s FedWatch) is still slightly in favor of another 25bp rate cut next month.

Up Next: PCE price index, preliminary GDP, and much more

It gets busy later today with plenty of economic data out of the US to digest including preliminary GDP (Gross Domestic Product) for the third quarter expected to show solid 2.8% growth, durables for the month of October likely reversing some of September’s losses, and a drop in pending home sales last month. None are expected to be as important as PCE (Personal Consumption Expenditures) price index for October expected to show headline growth of 0.2% m/m and a hotter 0.3% for its core, and for the y/y figures to rise to 2.3% and 2.8%, respectively.

Nasdaq 100 Technical analysis, overview, strategies, and levels

Key technical indicators on the weekly time frame remain positive with price not far off the upper end of the band and above its main moving averages, with an ADX (Average Directional Movement Index) rising but not in trending territory just yet and working within its bull channel keeping its technical overview ‘bull average’. But that channel is a bit too wide for comfort on the daily time frame even if price action as of late has been within narrower ranges. That means an overview that’s more ‘consolidation – volatile’ with clearer outperformance for conformist breakouts only once volatility picks up with a lack of a play for both conformist and contrarian strategies on the inability for intraday highs and lows to reach Tuesday’s 1^st levels. Today’s 2^nd Resistance level roughly coincides with this week’s weekly 1^st Resistance, though in a shortened holiday week might lack upside gains absent a proper catalyst.

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

CoT speculators have been pushing further into moderate net long territory reaching 59% though due to a larger reduction in shorts (by 8,096 lots) over longs (by 6,675), with net long bias also rising in the S&P 500 (to 53%) while dropping in the Dow (from 67% to 62%).

IG clients are in slight sell territory reaching 54% as of this morning, but they have generally been more cautious shorting into price gains given what have been strong upside movement in key US equity indices.

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.