Nasdaq 100’s technical overview still tested

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It was a mixed session in terms of US sector performance with energy and materials being on top; the tech industry wasn’t that far off, though communication suffered the most.

In terms of US economic data, its trade deficit widened to a record $125.3bn and was far worse than estimates in a potential test to GDP (Gross Domestic Product) readings, and wholesale inventories grew to 2.3% well above 1.5% expectations. The housing sector didn’t fare any better as pending home sales contracted again. This time by 1.2%, with mortgage applications suffering another negative reading with the weekly figure down 8.3% according to MBA (Mortgage Bankers Association).

Over in the bond market, yields were in for a rise across the board, the 10Y was not far off positive territory in real terms while breakeven inflation rates dropped a bit. Market pricing is still nearly fully priced in at 50bp (basis points) for next week's Federal Open Market Committee meeting, the majority 75bp for June, and the majority 50bp for July.

Component performance by the close put Netflix, Intuitive Surgical, and Alphabet at the very bottom. Facebook surged in after-hours, besting earnings but missing on overall revenue. Chinese stocks outperformed putting JD.com, Pinduoduo and Baidu Inc on top with heavyweight Microsoft not far off thanks to the latter’s earnings prior.

Apple and Amazon are the big ones releasing their figures today amongst the tech-heavy index’s components, also on offer are American Electric Power, Comcast, DexCom, Gilead Sciences, Intel, Keurig Dr Pepper, KLA-Tencor Corp, Seagen, Sirius XM, Atlassian, VeriSign, and Xcel Energy.

There will also be plenty of impacting US economic data over the next two days, with advance GDP tonight, and PCE (Personal Consumption Expenditures) pricing data tomorrow.

Nasdaq technical analysis, overview, strategies, and levels

For the tech-heavy Nasdaq 100, contrarian sell-on-reversal strategies outperformed in yesterday’s session, and caused a technical overview shift in this short-term daily time frame to match that of the weekly’s stalling bear trend, though noting prices are at a key level visible on the daily chart.

IG client* and CoT** sentiment for Nasdaq

As for sentiment, it’s still heavy buy for retail traders, and little changed since yesterday. Amongst the six indices, retail trader bias is majority buy for the S&P 500, Dow 30, Nasdaq 100, and DAX 40, while majority short FTSE 100 and ASX 200.

Nasdaq 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.