The Nasdaq100 Futures (CME: NQ) have surged impressively, notching up nearly a 6% gain since the beginning of the year, highlighting a robust start amidst a dynamic economic landscape.
Last week marked the fifth consecutive week of gains for these index futures, propelled by a tech sector buoyed by stellar earnings performances. The tech sector’s remarkable year-over-year earnings growth rate of 20.2% is particularly noteworthy, as reported by Factset Earnings Insights, positioning technology companies as frontrunners in the latest earnings season. Notably, semiconductor firms, spearheaded by industry titan NVIDIA Corporation (NASDAQ: NVDA), have played a pivotal role in driving this growth trajectory.
Despite these positive developments, the macroeconomic environment, notably driven by the strength of the U.S. Dollar, has introduced some headwinds for risk assets. The recent resilience in labour market reports has tempered expectations for imminent rate cuts, reshaping market sentiment significantly. As traders eagerly await U.S. inflation rate data this week, the focus remains on deciphering potential shifts in monetary policy dynamics, which could further influence the trajectory of Nasdaq100 Futures.
Technical
The Nasdaq100 Futures market structure has revealed a clear upward trajectory, supported by robust technical indicators.
Trading well above the 100-day moving average, the index futures exhibit a robust uptrend, supported by an ascending channel pattern. The establishment of a support level at 17221.50, coinciding with the moving average, further reinforces this bullish sentiment. Despite an initial dip, oversold RSI conditions prompted a rebound, propelling the futures to form new peaks.
Notably, a breakout above the 17793.50 resistance level, now turned support, underscores the bullish momentum. Currently trading just above the 23.60% Fibonacci Extension level, the index futures exhibit overbought RSI conditions, suggesting a potential reversal. Bearish traders will likely eye a retest of the 17793.50 level, while continued bullish momentum could propel the index futures further towards the 38.20% extension level.
Summary
The Nasdaq100 Futures showcase robust gains, with the tech sector leading the charge amid stellar earnings. Despite headwinds from a strong U.S. Dollar, the index futures exhibit a clear uptrend, supported by key technical levels at 17221.50 and 17793.50.
Sources: CME, Factset, Reuters, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
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