Nasdaq 100 Finds Spark Because of Amazon Forward of Fed. Lifeless Cat Bounce or Not?

NASDAQ 100 FORECAST:

• The Nasdaq 100 rebounds off technical help heading into the weekend following a selloff within the earlier buying and selling classes
• Amazon leads the cost increased due to strong company earnings
• Regardless of the optimistic temper on Wall Avenue, market dangers stay elevated forward of the Fed determination subsequent Wednesday

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The Nasdaq 100 staged a reasonable comeback on Friday after a big selloff in earlier buying and selling classes, with the tech index bouncing off cluster help within the 14,150/13,930 area, propelled increased by Amazon’s spectacular rally within the aftermath of the corporate’s quarterly outcomes.

For context, shares of the e-commerce big (AMZN) superior greater than 7% following better-than-expected Q3 earnings and constructive steering for its cloud providers enterprise, which accelerated late within the quarter, with “shocking” uptake for its generative AI merchandise.

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Whereas sentiment seems to be on the mend, a one-day reduction rally won’t considerably erase what has transpired because the center of July: the tech index has fallen sharply, coming into correction territory earlier this week after posting a ten% drop from the 2023 excessive.

For clues on market trajectory, merchants ought to intently comply with the Federal Reserve’s financial coverage announcement subsequent week and, extra importantly, its ahead steering. Whereas no change in rates of interest is anticipated, the central financial institution might supply perception into its subsequent steps when it comes to its climbing marketing campaign.

With Fedspeak blended in current weeks, it is very important watch what Fed Chair Powell has to say. Within the occasion that the FOMC reveals an inclination to hike borrowing prices once more in 2023, tech shares might come beneath stress. Conversely, any sign that the tightening cycle has ended ought to favor threat belongings.

The U.S. economic system has been extraordinarily resilient this yr, thanks partly to sturdy shopper spending. Towards this backdrop, inflation might stay sticky, pushing policymakers to maintain their choices open in case additional financial coverage tightening is important. This might weigh on the Nasdaq 100.

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NASDAQ 100 TECHNICAL ANALYSIS

From a technical standpoint, the Nasdaq 100 is at present sitting close to an space of cluster help that stretches from 14,150 to 13,930, the place the decrease restrict of the short-term descending channel converges with the 200-day SMA and the 38.2% Fibonacci retracement of the October 2022/July 2023 leg increased.

To create a pathway for a possible bullish resurgence, it’s important for confluence help within the 14,150/13,930 vary to carry. Any breach of this zone might spark a steep retrenchment, doubtlessly taking costs in direction of 13,270, which aligns with the 50% Fib retracement.

Within the occasion that the bulls handle to drive the index increased, preliminary resistance is positioned at 14,600. Upside clearance of this barrier might rekindle upward impetus and pave the way in which for a transfer to 14,860. On additional power, the eye will flip to fifteen,100.

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NASDAQ 100 TECHNICAL CHART

Nasdaq 100 Futures Chart Created Utilizing TradingView