Nasdaq 100: limited intraday gains as the tech sector lags

Key indices finish higher despite hawkish FOMC member speak

All sectors finished yesterday's session in the green, with utilities and real estate on top by a decent margin. While tech and communication avoided a red finish, they were at the very bottom, underperforming against the rest, with consumer discretionary also in the bottom half. That meant gains for the tech-heavy Nasdaq 100 (US Tech 100 on IG’s trading app and platform) that were less than those for the S&P 500, which enjoyed a record close, and especially against the Dow, which surged to get closer to 40,000.

As for Treasury yields, they finished the session generally lower (amidst a strong 7Y auction), averaging lower in real terms by the close. Market pricing (CME's FedWatch) favored the first cut in this cycle in June, but it won't take much to change that narrative with a total of three rate reductions this year. The Federal Reserve’s (Fed) Waller said that there's "no rush to cut the policy rate," with the data suggesting it's "prudent to hold this rate at its current restrictive stance perhaps for longer than previously thought."

There was little in terms of data to digest out of the US, with the weekly mortgage applications down again, though with a small -0.7% print. But there’s plenty later today, including GDP (Gross Domestic Product) for the fourth quarter of last year as well as the revised figures out of UoM (University of Michigan) for this month. As for tomorrow, the stock market will be closed, but impacting data will be released, including the PCE (Personal Consumption Expenditures) price index, thereafter with Fed Chairman Powell speaking.

Nasdaq technical analysis, overview, strategies, and levels

The intraday highs yesterday failed to reach its previous 1st Resistance level, resulting in a lack of a play once more for conformist and contrarian strategies on this daily time frame. While most key technical indicators are neutral when compared to the more bullish weekly time frame, the technical overview here for both remains ‘bull average’ where buy strategies off the 1st Support and Resistance levels are in the conformist camp, even if via significant caution off the former, and sell strategies for key levels are for contrarians.

IG client* and CoT** sentiment for the Nasdaq

In sentiment, price gains usually result in retail traders taking a larger sell bias as longs get enticed into closing out and shorts initiate. The opposite has happened this time around with a reduction in sell bias from 60% yesterday to 59% as of this morning. CoT speculators according to last Friday’s report are in majority long territory albeit still slight buy even after raising it a few notches from 51% to 54%.

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.