S&P 500 AND NASDAQ 100 KEY POINTS:
- After a weak open, S&P 500 and Nasdaq 100 reversed losses and finished the day in positive territory, with the technology index leading gains in the U.S. market
- Earnings season will be the main catalyst for stock prices in the near term
- Netflix and Tesla’s quarterly results will take center stage this week
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S&P 500 and Nasdaq 100 opened with moderate losses on Monday weighed by worse-than-expected economic data in China and stagflation anxiety, but quickly reversed their declines as on overnight rally in oil prices faded, alleviating some fears of mounting inflationary pressures and policy tightening.
At the market close, the S&P 500 rose 0.34% to the 4,486, while the Nasdaq 100 climbed 1.02% to 15,300, gaining ground for the fourth consecutive day in both cases, a sign that buying interest may be increasing ahead of key quarterly earnings over the next few days and weeks.
As of today, 81% of companies reporting results belonging to the S&P 500 have beaten EPS forecasts, with major banks surpassing expectations handsomely, an outcome that has boosted sentiment and eased concerns over the doom and gloom narrative making its way around Wall Street.
However, it is important to note that investors will likely pay more attention to the performance of companies in the technology sector, given their monumental size in proportion to the overall market. That said, the spotlight will on Netflix and Tesla this weekwhen they release their financial statements on Tuesday and Wednesday, respectively.
If both NFLX and TSLA, with a combined market capitalization of approximately $1.2 trillion, manage to surprise to the upside, sentiment toward the tech sector could continue to improve, creating a constructive backdrop for the S&P 500 and Nasdaq 100 to prolong their recovery in the near-term. The reverse is also true. If these companies disappoint by a wide margin, traders could begin to bail on big tech, disrupting the stock market’s nascent rebound.
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MARKET EXPECTATIONS FOR NETFLIX AND TESLA
NASDAQ 100 TECHNICAL ANALYSIS
After the recent rebound, the Nasdaq 100 breached a short-term descending trendline in play since last month, printing a higher high on the daily chart and invalidating the near-term bearish bias. Moreover, following today’s rally, the index has broken above cluster resistance in the 15,195 area, created by the 50-day simple moving average and the 61.8% Fib retracement of the September/October pull-back. If price holds above this region in the coming sessions, buying interest could accelerate, paving the way for a move towards 15,360, followed by 15,700, the record high.
Conversely, if the Nasdaq 100 drops below 15,195 decisively, the first technical support to watch out for appears at 15,010. Ifbears manage to push price below this floor, the downside pressure could strengthen, triggering a pullback towards 14,800.
NASDAQ 100 TECHNICAL CHART
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—Written by Diego Colman, Contributor
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