Nasdaq 100 Trade: AI announcement sends tech-heavy index higher

Gains for equities amidst more tariff talk, and then came the AI announcement

Key US equity indices enjoyed a session of gains with the S&P 500 up 0.88% and back above 6K and the Dow rising 1.24% crossing 44K. It was a session of outperformance for the Russell 2000 rounding up to 2% gains, while the tech-heavy Nasdaq 100 was up a smaller 0.58% to 21,566 as the tech sector lagged behind all sectors save for energy. The focus was initially on tariff talk and the likely February starting data as President Trump considered a 10% tariff on China and that the EU are “going to be in for tariffs”, but the AI announcement is a plus for the tech sector and in the futures market has seen the index rise 0.7%.

A $500bn fund for AI infrastructure starting with $100bn in a joint venture named Stargate planned between OpenAI, SoftBank and Oracle to build the data centres. Shares of Oracle closed 7% higher and gained about 5% more in extended trading to $180 following the announcement, Nvidia climbed to $143 and Arm Holding up 8% when including gains in extended trading breaching $162. But it wasn’t all good news out of the tech sector as shares of heavyweight Apple closed 3% lower to $222 as it suffered a downgrade out of Jeffries to underperform from hold.

Over in the bond market, Treasury yields are lower than the close of last week and so too in real terms on the further end of the curve, market pricing (CME’s FedWatch) anticipating a hold out of the US Federal Reserve (Fed) next week and where the first rate cut this year won’t arrive until the second quarter and an ongoing struggle on getting a second reduction in 2025 with the likelihood roughly a coin toss. There’s been a dearth of items to process out of the US in terms of the economic calendar, and that’s expected to largely remain the case later today with the weekly mortgage applications.

Netflix’s earnings

Earnings from (Nasdaq 100 component) Netflix clearly impressed beating on earnings and revenue, subscriptions topping 300m, and that they’ll hike prices on most plans in the US. That sent its shares to a record high of over $994 in extended trading. And while there are plenty releasing their figures today, we’ll have to wait until tomorrow if looking for components of the tech-heavy index with Intuitive Surgical, Texas Instruments, and CSX.

Nasdaq 100 Technical analysis, overview, strategies, and levels

Key technical indicators on the daily time frame are mostly neutral save for being price above all its main daily moving averages (MA) and nearing the upper end of the band, as otherwise on the DMI (Directional Movement Index) front the +DI not far off the -DI with the crosses thus far failing to offer follow-through, an ADX (Average Directional Movement Index) not in trending territory, and the RSI (Relative Strength Index) near the middle. That usually translates into a technical overview that’s ‘cautious consolidation’ where significant reversal strategies are for conformists while contrarians go for breakouts, but the intraday volatility (even if due to fundamental items as of late) and the variation beyond the latest ‘average’ has given breakouts an edge even if they had to wait for interday follow-through. And while that intraday volatility is expected to eventually drop (or at the very least give a chance for intraday levels to catch up), there’s the matter of upcoming items next week with earnings from Big Tech, the FOMC’s expected hold, and pricing data.

As for the weekly time frame, the overview was and still is ‘bull average’ with price still working within the bull channel and a couple technical indicators green, meaning buy strategies are in the conformist camp and sell plays for contrarians.

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

CoT speculators have opted to edge closer to the middle once more experiencing their fifth consecutive drop in net long bias taking it from 57% to 54% on a drop in longs (by 8,269 lots) and a simultaneous but small increase in shorts (by 196). If the latest drop in net long bias is based off of the relative pullback in price with positioning as of last Tuesday means the likelihoods of an increase in net long sentiment might occur once the next report is released this Friday.

IG clients have been in majority buy territory for about a few weeks now buying into the dips that occurred earlier this month and beneficiaries of the increase in price that reduced their bias from 58% yesterday to 57% 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.