U.S. EQUITY OUTLOOK:
- S&P 500, Nasdaq 10 bounce back after Fed minutes fail to deliver new hawkish surprises
- While the market rebound is welcome, sentiment remains fragile on Wall Street
- April PCE data in the US will take center stage on Friday
- This article takes a look at the key technical levels to watch in the Nasdaq 100 over the next few days
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U.S. stocks rebounded on Wednesday after suffering heavy losses on Tuesday as social media companies tumbled and dragged down the entire tech sector with them. For most of the day, stocks struggled to find a clear direction, but managed to rebound late in the session after the FOMC Minutes from the May Rally bring no new warmongering surprises. Although the reading of the last conclave showed that the central bank continues to favor a rate hike in 50 basis point increments in upcoming meetings, there has been no suggestion that policy makers were gravitating toward more aggressive actions restore price stability.
Ultimately, the S&P 500 climbed 0.95% to 3,978, posting its best close in a week. The Nasdaq 100, for its part, jumped 1.48% to 11,943, supported in part by the retracement in US Treasury rates, with the 10-year yield briefly touching a daily low of 2.7%, its low. level since April 14.and. Although bulls likely welcomed the positive move on Wall Street, the the tech index remains mired in a steep bear marketdown almost 29% from its peak in November of last year.
Looking ahead, first quarter GDP will be the high point of the US economic calendar on Thursday. The report, however, will be the second estimate from the U.S. Bureau of Economic Analysis, so it is unlikely to have a significant impact on risky assets unless there is a major revision to the preliminary reading that showed a 1.4% contraction in production.
Friday, the heart personal consumption expenditure the price the index, the Fed’s favorite inflation indicator, take center stage. In terms of forecasts, April’s Core PCE is expected to slow to 4.9% YoY from 5.2% YoY in March, a sign that inflationary pressures may have peaked in the first quarter of the year. year. Considering this is a high impact report, we could see high price volatility before the weekend, amplified by thinner cash flow ahead of Memorial Day holidayespecially if the results are surprising compared to expectations.
NASDAQ 100 TECHNICAL ANALYSIS
The Nasdaq 100 rallied on Wednesday, but the buying momentum hasn’t been particularly strong, indicating that traders aren’t yet rushing to recoup the downed tech stocks. In any case, if the bulls manage to push the price higher in the next few days, initial resistance appears at 12,250, followed by 12,600. In addition to strength, the the accent shifts upwards to 13,000.
On the other hand, if the sellers return and dampen the recent rally, as has happened many times during this bear market, the first technical support to watch appears around the 2022 lows at 11,492. If we see a move below this floor, the downside pressure could accelerate, exposing the November 2020 low near the 11,000 psychological level.
NASDAQ 100 TECHNICAL CHART
Nasdaq 100 chart prepared using TradingView
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—Written by Diego Colman, Market Strategist for DailyFX