Nasdaq 100: Small gains as participants brace for Nvidia’s earnings

Calmer moves as of late as tech finishes on top

It’s been relatively calm as of late when it comes to key US equity indices with limited gains on offer yesterday for the Dow 30 not far off its recent record high, slightly more for the S&P 500, and the tech-heavy Nasdaq besting them both albeit also failing to boast sizable moves. Looking at sector performance and none managed to close more with more than a 1% change from where they opened, and this time around it was tech on top instead of the very bottom at the start of the week, and energy suffering most in the very bottom.

A part of it has been due to relatively little to digest, economic data out of the US showing consumer confidence (out of Conference Board) improving to 103.3 and besting forecasts, Richmond Fed’s manufacturing index worsening to -19 and a miss, and housing price data for the month of June showing 0.1% month-on-month (m/m) contraction (according to FHFA).

Treasury yields finished the session mixed with the further end slightly higher but lower on the shorter end with little change in real terms, traders processing a decent two-year auction. Market pricing (CME’s FedWatch) continues to fully price in a rate cut out of the US Federal Reserve in their upcoming September meeting, but it’s still a minority on it being a larger 50bp (basis points) reduction.

Nvidia’s earnings, impacting data thereafter

But if you’re tired of lower-impacting items then you’re in luck given what’s on offer today onwards, as the main event of the week for the tech sector releases today after market close with ‘AI engine’ Nvidia set to release its figures for the second quarter. Expectations are for revenue to more than double to $28.7bn when compared to the same period last year, and the same story for earnings to $0.64. But investors won’t be content with just a clean beat, as guidance will be crucial for the growth stock to see whether AI demand is waning.

Otherwise, there’s an FOMC (Federal Open Market Committee) member speaking later today and the five-year auction. We’ll get preliminary GDP (Gross Domestic Product) tomorrow as well as the weekly claims before the attention shifts to pricing data with PCE (Personal Consumption Expenditures) Price Index on Friday.

Nasdaq 100 Technical analysis, overview, strategies, and levels

Key technical indicators on the daily time frame are mostly neutral though price is still above all its main long-term daily moving averages, on the DMI (Directional Movement Index) front a recent cross of the -DI over the +DI (and not far off doing so on the weekly time frame where proximity between the two has made it an easier task and less reliable signal), an ADX (Average Directional Movement Index) not in trending territory, and price near the middle of the band.

That usually translates into an overview that’s more consolidatory, but technical signals prior showed price wouldn’t be settling here keeping it ‘consolidation – volatile’ where breakout strategies are reserved for conformists who have failed to get the necessary follow-through as of late when looking at it intraday, else prior to that outperforming sizably on the volatile moves and shifts to new zones. The fundamental catalysts might help offer that shift depending on how results compare to expectations, otherwise it’ll be contrarian reversal strategies likelier to win out, initiating only after a reversal to avoid any initial uptick in volatility that might stop out fading strategies.

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

CoT speculators have opted to remain close to the middle for months, and the latest report is no exception even as they moved a notch higher to a majority buy 56% on the increase in longs (by 5,877 lots) outdoing the rise in shorts (by 3,918).

IG clients have also been near the middle as of late and shifted to majority buy recently, opting to remain in slight long territory for the time being at just 51% 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.