Nasdaq 100: Tech hit hardest as stronger US data sends yields higher

Tech in retreat, yields rise on stronger data, and Tesla suffers a downgrade

It was a red session for key US equity indices with losses for the S&P 500 (-1.11% to 5,909), but with the tech suffering most as a sector meant a larger retreat for the tech-heavy Nasdaq 100 (1.8% lower to 21,173). Economic data out of the US mostly impressed with ISM (Institute for Supply Management) services PMI (Purchasing Managers’ Index) a beat rising from 52.1 to 54.1 for the month of December, but its pricing component jumping from 58.2 to 64.4 raising inflation fears. That sent Treasury yields higher (10Y not far off 4.7%) and market pricing (CME’s FedWatch) for the next (and in 2025, only) Fed rate cut pushed out to Q2.

There were plenty of the Nasdaq 100’s components in the red including MicroStrategy shares down 10% to $341, but in terms of heavyweights both Nvidia (plummeting 6% to $140 following its CES reveal) and Tesla (down 4% breaking beneath $400 following the Bank of America downgrade to neutral) took the attention.

FOMC meeting minutes, more labour data, and another auction

Up next, we’ve got minutes from the latest FOMC (Federal Open Market Committee) meeting, more labour data with ADP’s non-farm estimate after yesterday’s JOLTS job openings beat, and another Treasury auction.

Nasdaq 100 Technical analysis, overview, strategies, and levels

Key technical indicators on the daily time frame are mostly neutral with price still above its main long-term moving averages (MA) but not the case for shorter-term ones, closer to the middle of the band and away from overbought and oversold territory when it comes to the RSI (Relative Strength Index), on the DMI (Directional Movement Index) front not a large enough margin for the -DI over the +DI to label it negative just yet, and an ADX (Average Directional Movement Index) by one calculation not in trending territory. The overview is more ‘consolidation – volatile’ at this stage giving conformist breakout strategies the edge when there’s an uptick in volatility and combined with interday follow-through even when intraday moves are relatively sedate.

But zooming out to the weekly time frame and we’re still working with a bull channel, in all keeping the technical overview ‘bull average’ where buy strategies are in the conformist camp even if cautious off the weekly 1^st Support level initiating only after a significant reversal, and sell strategies for contrarians who see oscillations at these levels or even a more notable pullback.

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

CoT speculators are still net long but have been slowly trimming that bias over the past few weeks reaching 60% as of last week on a reduction in longs (by 5,252 lots) that was larger than the drop in shorts (by 831).

IG clients have been near the middle over the past two weeks with a shift occurring from a majority short 56% yesterday to a majority long 56% today following the pullback in price enticing shorts into closing out and longs into initiating.

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.