The Nasdaq 100 futures (CME: NQ) are riding a lucrative upward trend despite the unexpected strength of Friday’s jobs report. The tech-heavy index reaped the rewards of Meta’s impressive earnings release, witnessing a remarkable 20% surge in its stock and a staggering $196 billion addition to its market value – the most significant single-day increase in Wall Street history. Amazon joined the upward momentum with a nearly 7% rise, fuelled by positive earnings sentiments. However, a robust jobs report restrained the futures’ gains, with Non-Farm Payrolls (NFP) exceeding expectations at 353K, almost doubling the forecasted 180K.
Despite the anticipated rise to 3.8%, the unemployment rate held steady at 3.7%, and average hourly earnings growth surpassed predictions at 4.5% compared to the forecasted 4.4%. Consequently, the market adjusted its expectations for the Federal Reserve’s initial round of rate cuts. The CME FedWatch Tool indicates a mere 17.5% probability of easing in March, down from the 46.2% predicted a week ago. Even May’s predictions were moderated, with the probability of a cut decreasing from 86% last week to 68%. This reflects the unexpectedly robust state of the US economy, which is adapting well to higher rates and diminishing the urgency for immediate and aggressive easing measures.
Technical
On the 4H chart, an ascending triangle pattern has emerged. Resistance at 17,729.50 is proving a challenging resistance to breach, but the formation of higher lows on the downswing keeps the hopes of a bullish breakout alive. However, the 50-SMA (blue line) has recently crossed above the 25-SMA (green line), suggesting that the short-term bullish momentum may be running out of steam.
Support at 17,639.25 is currently under the spotlight. If the futures remain above this level, it could retest the resistance of the triangle again to attempt a breakout. However, if the support fails to hold, the futures could pull back toward 17,454.75. This move could push the price below the 25-SMA and 50-SMA, making the dynamic support of the triangle vulnerable to a breakdown and trend reversal. If the triangle gets broken down, support at 17,338.50 at the 100-SMA (orange line) could be important.
Conversely, if the support at 17,639.25 holds in the upcoming sessions, a breakout can occur at 17,729.50. The resistance at 17,795.25 could then present a hurdle to the upside, potentially acting as a pivot point to a retracement. However, if this resistance gets breached, the price could trickle higher toward the 161.8% Fibonacci extension at 18,037.00.
Summary
While the market tempered its expectations for aggressive rate cuts early in 2024 following the latest jobs data, the Nasdaq 100 futures maintained their upward trajectory, as optimism surrounding the latest earnings from some technology giants has kept the bullish momentum going. If support at 17,639.25 holds in the upcoming session, a triangle breakout could occur, potentially propelling the futures to new heights.
Sources: Koyfin, Tradingview, CME Group
Piece written by Tiaan van Aswegen, Trive Financial Market Analyst
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