Nasdaq 100: waiting for the next catalyst

Calmer moves, hawkish FOMC member speak, and low-impacting data

Another calm session where there wasn’t as much to process compared to last week’s fundamental items. US sector performance by the close saw slight gains for tech but both communication and consumer discretionary suffer small losses, and in turn, a finish not far off where it started for the tech-heavy Nasdaq 100, failing to match the Dow 30’s recent run of consecutive gains. The positive was a lack of a significant fall for the key index even as Treasury yields finished the session higher, and so too in real terms, with the Federal Reserve’s Collins on needing "more time than previously thought" to bring down inflation and the "slowdown in activity" that'll be "needed to ensure that demand is better aligned with supply”.

Otherwise, little to get excited about in terms of data, with the weekly mortgage applications (MBA) up 2.6% and wholesale inventories as anticipated, down 0.4% for March. Expect a similar theme today with the weekly claims, another Fed member expected to speak, and the 30-year auction after a decent enough 10-year yesterday. It’ll get more interesting tomorrow with a string of members speaking and the preliminary readings out of UoM (University of Michigan) for consumer sentiment and inflation expectations.

Nasdaq technical analysis, overview, strategies, and levels

It’s a tricky situation when it comes to the technical overviews in both daily and weekly time frames for this tech-heavy index; the volatile moves prior giving conformist breakouts the edge, but a struggle as of late, with the moves relatively dull and, at times, lacking a play for contrarians as well. There are a couple of key technical indicators that are bullish, with the price above all its main daily moving averages, but it won’t take much in terms of a pullback to change that narrative due to price-indicator proximity. The remaining key indicators are generally neutral and, in turn, lacking a signal. While the short-term bull channel is seen as a positive, its width means buy strategies can’t be initiated without consideration and, more so, if there’s a move to the lower end of the channel.

IG client* and CoT** sentiment for the Nasdaq

As for sentiment, it’s been a story of majority short bias among retail traders since shifting last Thursday from majority buy, as they bought on dips enjoying the short-term recovery. CoT speculators were majority buy a couple weeks back and have also opted to shift, albeit (for now) only to the middle.

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 6am 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.}