The Nasdaq100 Futures (CME: NQ) concluded Wednesday’s session with a notable shift, breaking a seven-day winning streak by shedding 57 basis points.
This dip was orchestrated against the backdrop of robust U.S. economic data, particularly the surge in December retail sales, surpassing expectations at an impressive 5.6%. The stellar retail performance prompted a recalibration of market expectations, with the probability of a March rate cut dwindling to 53.8%, down from 70.2% a mere week ago.
However, the resilience of the Nasdaq100 Futures was swiftly showcased in the London session on Thursday, rebounding with vigour, gaining 86 basis points and reclaiming lost ground. The catalyst for this rebound emerged from Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract semiconductor maker, reporting optimistic quarterly profits and projecting over 20% revenue growth, primarily fuelled by the soaring demand for artificial intelligence chips. This positive outlook rippled through U.S. chip stocks, propelling them higher in premarket hours.
Technical
In the early days of 2024, the Nasdaq100 Futures embarked on a tumultuous journey, veering beneath the 100-day moving average following a swift December surge.
At a formidable resistance of 17165.25, the index faced headwinds driven by overbought conditions in the Relative Strength Index (RSI). Yet, amid a subsequent descent through crucial Fibonacci Retracement levels, a lifeline emerged just above the 61.80% Golden Ratio, accompanied by oversold RSI conditions.
This pivotal juncture acted as a turning point, thwarting a sustained move towards the significant support at 15792.50, crafted during the December 2023 rally. The Golden Ratio became a beacon, empowering buyers and instigating a bullish trend that propelled the index above the 100-day moving average. While a minor dip near resistance posed a temporary challenge, the index futures swiftly rebounded, showcasing prevailing bullish momentum and hinting at a potential retest of the 17165.25 resistance level. Conversely, the 100-day moving average stands as a point of interest to the downside should bearish sentiment gain traction in this dynamic market narrative.
Summary
In a whirlwind of market dynamics, the Nasdaq100 Futures rebounded with resilience, gaining 86 basis points after a brief dip orchestrated by robust retail data. Fuelled by positive cues from Taiwan Semiconductor Manufacturing Company, the index hints at a potential retest of the 17165.25 resistance level.
Sources: CME, Reuters, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
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