Nasdaq 100, NQ Futures, RBA, ECB, BoE – Talking Points
- Nasdaq 100 Index rallied over 3% to finish out grueling January
- NQ (Nasdaq Futures) traded up to 38.2 retracement from recent decline
- 200-day moving average in sight just above 15,000 threshold
The Nasdaq 100 Index gained more than 3% on Monday to round out a tumultuous month for risk-assets. January 2022 was the worst month for the tech-heavy index since March 2020, as the index retreated roughly 9%. Market participants may want to remain cognizant of the fact that some of the strongest equity rallies come during bear markets. It appears that price is still looking for a clear path following last week’s hawkish Fed meeting, as both breadth and sentiment appear to vary day by day. Risk assets will get a better grasp of the path of global monetary policy this week, as the Reserve Bank of Australia, European Central Bank, and Bank of England all have policy meetings scheduled.
Tech stocks, which have been hit hard recently as investors have rotated to more cyclical oriented names, posted robust gains on Monday. Netflix and Spotify offered double digit gains on the back of upgrades from Citi, while Tesla rose more than 10% on an upgrade from Credit Suisse. Despite Monday’s strong bounce, Tesla still posted an 11% drop in January. Part of the bounce may have been from month-end flows, with institutions looking to rebalance their books and buy back names that significantly underperformed throughout the month.
Nasdaq 100 Daily Chart
Chart created with TradingView
Friday’s session saw Nasdaq 100 futures (NQ) close right at the 23.6 Fib retracement from the recent pullback from all-time highs. That level around 14,430 may now become support, with Monday’s session opening above this key level. Price soared higher to test the 38.2 retracement, but fell short of a test of the 200-day moving average near 15,000. This could represent the next scalp the index may look to take, as bulls look to reclaim what has been lost over the last month.
The index’s path forward does not exist without challenges, as the tide of monetary policy continues to turn. In comments made on Monday, Fed voting member Esther George said markets may face some turbulence during the normalization process. Key levels in the near-term for NQ could be the October lows near 14,367 and the key psychological level at 15,000. A break higher and price may be inclined to retrace further toward 16,000. Should we reverse lower from current levels, a break of the October lows may bring the dark abyss below 14,000 into play. Given its high beta nature, it would appear that the Nasdaq 100 Index continues to sit perched on a knife-edge.
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— Written by Brendan Fagan, Intern
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