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Nvidia’s impressive earnings report, released after the market close yesterday, sent shockwaves through the tech sector. The AI and semiconductor giant crushed analyst expectations, boasting a 265% year-over-year jump in revenue and projecting continued growth in 2025 and beyond. This has fueled optimism in the technology-heavy Nasdaq 100 Index (CME: NQ), pushing futures contracts higher and undoing recent losses.
However, cautious signals from the Federal Open Market Committee (FOMC) minutes and Fed member pronouncements tempered the rally. While rate cuts are anticipated later in the year, the Fed remains focused on containing inflation, potentially limiting the upside for high-growth stocks like those in the Nasdaq 100.
Technical Analysis:
On the 4-hour chart, the index is currently at 17,802.25, with a slight upward trend following the Nvidia-induced recovery. The price action recently broke above the 20-SMA (green line) and 100-SMA (orange line), currently trading around the 50-SMA (blue line). Notably, the 20-SMA recently crossed below the 50-SMA and 100-SMA, indicating a potential downtrend reversal. The RSI (56.80) is sharply rising and recently broke above the 50.00 level, suggesting momentum towards the upside.
With the recent break above key SMAs, a potential for a push high could exist, with the 18,000.00 price level likely to act as a significant level in the short term. Short-term trading opportunities towards the 18,200.00 price level could exist should the price action sustain a break above the 18,000.00 price level.
However, a beak below the SMAs would leave the 17,568.00 price level as the level of interest lower. A break below the 17,568.00 support level would bring the 17,370.00 support level into play in the short term.
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Summary
The Nasdaq 100 is riding a wave of optimism propelled by Nvidia’s strong earnings. However, the Fed’s hawkish stance and broader economic uncertainties cast a shadow. Technical analysis suggests a potential for further upside towards 18,000.00, with key support levels at 17,568.00 and 17,370.00.
Sources: TradingView, Trading Economics, Dow Jones Newswire, Reuters, Nvidia, Federal Reserve.
Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst
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