Nasdaq Starts the Week Higher as Investors Await Additional Data.
Introduction
In the aftermath of last week’s substantial gains, the Nasdaq experienced a slight increase on Monday. However, investors remained cautious as they eagerly anticipated the quarterly reports from major companies throughout the week. Despite this cautious sentiment, the Nasdaq 100 opened on a positive note, rising by 36.21 points or 0.26%, reaching a value of 14,149.92.
Dow Jones Industrial Average Records Impressive Weekly Increase
Last week, the Dow Jones Industrial Average witnessed a remarkable surge of 2.3%, marking its highest weekly gain since March. In a similar fashion, both the S&P 500 and the Nasdaq Composite recorded gains of 2.4% and 3.3% respectively. These substantial increases were attributed to strong performance by prominent banks and reports of reduced inflation. Consequently, investor confidence received a boost, leading to some skepticism regarding the Federal Reserve’s ability to control inflation without adversely impacting the economy.
Key Earnings Reports to Drive Second-Quarter Momentum
This week, the market eagerly awaits the release of quarterly earnings reports from major financial organizations such as Bank of America, Morgan Stanley, and Goldman Sachs. These reports will undoubtedly serve as crucial catalysts for the ongoing second-quarter earnings season. Additionally, investors are eagerly anticipating the earnings results from industry giants like United Airlines, Las Vegas Sands, Tesla, and Netflix.
Fed’s July Policy Meeting and Interest Rate Hike Expectations
As the week progresses, the “blackout period” for the Federal Reserve’s July policy meeting commences. According to the Fed Watch tool from CME Group, traders are overwhelmingly confident, with a 97% probability that the central bank will raise interest rates later this month. This expectation comes after the Federal Reserve temporarily halted rate increases in June.
Evaluating the Economy and Monetary Policy
Against the backdrop of lower-than-expected consumer and wholesale inflation data from the previous week, investors closely examined the outlook for the economy and monetary policy. Consequently, U.S. Treasury yields experienced a decline on Monday. With attention now shifting towards the Federal Reserve’s upcoming rate-setting meeting, few significant economic data announcements are scheduled for this week.
NASDAQ 100 Technical Analysis Daily Chart
The daily chart of the Nasdaq 100 indicates that the market is currently trading within an upward channel. Furthermore, the Nasdaq 100 is positioned above all Simple Moving Averages (SMA). The Relative Strength Index (RSI) suggests a bullish trend, while the Stochastic oscillator indicates a neutral outlook. As for immediate levels, resistance stands at 15,609.10, with support at 15,535.22.
How to Trade Nasdaq 100 This Week
Given the current scenario, the Nasdaq 100 continues its upward trajectory, adhering to a pattern of higher highs. At present, the Nasdaq 100 is trading close to the previous day’s high. Unless a significant change in trend occurs, it is expected that the Nasdaq 100 will continue to trade higher.
Trade Suggestion for the Week
For traders interested in the Nasdaq 100, a potential trade suggestion would be to enter the market at 15,674.23. The target price to aim for is 15,773.48, with a suggested stop loss set at 15,606.50.
Conclusion
As investors eagerly await additional data, the Nasdaq started the week on a positive note. The market witnessed significant gains in the previous week, driven by strong bank performances and reports of reduced inflation. As the earnings season gains momentum, major financial organizations and tech giants’ reports are expected to shape market sentiment. Furthermore, market participants closely monitor the Federal Reserve’s upcoming policy meeting and the likelihood of an interest rate hike. Amidst these developments, the Nasdaq 100 technical analysis suggests a continued upward trend. Traders are advised to exercise caution and consider the trade suggestion provided as they navigate the market this week.
Frequently Asked Questions (FAQs)
Q: What contributed to the Nasdaq’s increase on Monday?
A: The Nasdaq saw a slight increase on Monday due to last week’s substantial gains and the anticipation surrounding upcoming quarterly reports from major companies.
Q: Which financial organizations’ earnings reports are expected this week?
A: Bank of America, Morgan Stanley, and Goldman Sachs are among the major financial organizations expected to release their earnings reports this week.
Q: What is the probability of the Federal Reserve raising interest rates later this month?
A: According to the Fed Watch tool from CME Group, there is a 97% chance that the central bank will raise interest rates after the conclusion of its July policy meeting.
Q: How did U.S. Treasury yields respond to the weaker-than-expected inflation data?
A: Following the release of weaker-than-anticipated consumer and wholesale inflation prints, U.S. Treasury yields decreased on Monday.
Q: What does the technical analysis of the Nasdaq 100’s daily chart reveal?
A: The Nasdaq 100 is currently trading within an upward channel and positioned above all Simple Moving Averages (SMA). The Relative Strength Index (RSI) suggests a bullish trend, while the Stochastic oscillator indicates a neutral outlook.
Q: What trade suggestion is provided for the Nasdaq 100 this week?
A: Traders are recommended to enter the Nasdaq 100 at 15,674.23, with a target price of 15,773.48 and a suggested stop loss set at 15,606.50.