THE BOTTOM IN THE NQ 100 OR MORE WEAKNESS TO COME?
Key Developments:
The E-Mini Nasdaq 100 futures contract has had a rough month in April. Some of this correction was due to fears surrounding higher interest rates and persistent inflationary pressures. However, we believe most of the weakness had to do with other technology stocks that had reported earnings prior to META, GOOG, and MSFT.
ASML, a semiconductor company based in the Netherlands issued a murky global outlook for chip demand. Taiwan Semiconductor also provided softer-than-expected guidance. Softer guidance from these large AI players sparked some fear surrounding Mega-cap tech, and market participants priced in potential weakness to come.
However, the market received better-than-expected earnings from META, GOOG, and MSFT. GOOG and MSFT also issued better guidance. The outlook for AI and the massive amount of CapEx being spent to build AI infrastructure lifted the index notably higher last Friday's trade. NVDA rallied more than +6%, and GOOG finished higher by nearly +10%.
NVDA is the 3rd largest company by weight in the Nasdaq 100 index, and as more companies increase AI CapEx, NVDA stands to benefit and should keep the Nasdaq 100 elevated.
Despite slightly higher YoY PCE data on Friday, the MoM number came in as expected. Also, Michigan Consumer Sentiment fell slightly from the previous reading, and the 10yr Treasury Note rallied. As of now, the economy is still growing, and earnings expectations are exceeding estimates. It seems tech stocks may have bottomed in the near term.
Technicals:
As we can see, the 21-day Exponential Moving Average (EMA) and 50-day EMA have converged. If the 21-day manages to cross above the 50-day, this is technically bullish momentum, and we could see more upside for the E-Mini Nasdaq 100 futures.
Check out CME Group real-time data plans available on TradingView here: www.tradingview.com/cme/
Disclaimers:
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com/cme/
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
The E-Mini Nasdaq 100 futures contract has had a rough month in April. Some of this correction was due to fears surrounding higher interest rates and persistent inflationary pressures. However, we believe most of the weakness had to do with other technology stocks that had reported earnings prior to META, GOOG, and MSFT.
ASML, a semiconductor company based in the Netherlands issued a murky global outlook for chip demand. Taiwan Semiconductor also provided softer-than-expected guidance. Softer guidance from these large AI players sparked some fear surrounding Mega-cap tech, and market participants priced in potential weakness to come.
However, the market received better-than-expected earnings from META, GOOG, and MSFT. GOOG and MSFT also issued better guidance. The outlook for AI and the massive amount of CapEx being spent to build AI infrastructure lifted the index notably higher last Friday's trade. NVDA rallied more than +6%, and GOOG finished higher by nearly +10%.
NVDA is the 3rd largest company by weight in the Nasdaq 100 index, and as more companies increase AI CapEx, NVDA stands to benefit and should keep the Nasdaq 100 elevated.
Despite slightly higher YoY PCE data on Friday, the MoM number came in as expected. Also, Michigan Consumer Sentiment fell slightly from the previous reading, and the 10yr Treasury Note rallied. As of now, the economy is still growing, and earnings expectations are exceeding estimates. It seems tech stocks may have bottomed in the near term.
Technicals:
As we can see, the 21-day Exponential Moving Average (EMA) and 50-day EMA have converged. If the 21-day manages to cross above the 50-day, this is technically bullish momentum, and we could see more upside for the E-Mini Nasdaq 100 futures.
Check out CME Group real-time data plans available on TradingView here: www.tradingview.com/cme/
Disclaimers:
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com/cme/
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.