It seems like the Nasdaq 100 and other US markets have caught the coronavirus bug, because this week has been nothing short of terrible as far as the bulls are concerned. After teasing to please with an opening gap that hit record highs on Tuesday, it has been downhill ever since.
Today’s retail sales figures are probably the cause of the bearish actions of the day. US Retail Sales and Core Retail Sales came in at 7.5% and 7.3% respectively. Even though these were higher than the estimates of 5.0% for each, both numbers fell far short of last month’s figures of 18.2% and 12.1% respectively.
These figures point to a slowing of the retail market. They are starting to confirm the fears of market analysts: that rising coronavirus numbers could prompt governments to start shuttering business and locking down entire neighbourhood and towns, which could unwind all the recovery that has taken place in May and June.
Furthermore, today’s unemployment claims data shows that 1300K people filed for unemployment benefits for the first time. This figure was only a fraction lower than last week’s number of 1310K and higher than the consensus of 1250K. This shows that millions of people are still losing their jobs and applying for benefits, which is negative for the Nasdaq 100 index.
So far, the markets are not paying attention to the earnings reports or the recent news about successful tests of coronavirus vaccine candidates. It is all about the coronavirus and its impact on the economy.
Technical Outlook for Nasdaq 100
The Nasdaq 100 is down 1.8% and is trading at 10503.9 as at the time of writing. Today’s drop follows a series of bearish candlestick patterns: the bearish engulfing candle and the two pinbars. Price is looking more likely to target 10307.3, which is the nearest support. A breakdown of that support is required to bring in 10156.50, 9867.1 or 9730.2 into focus as likely downside targets. However, the lower border of the channel could be an impediment and needs to give way for the move towards 9867.1 to come to fruition.
On the flip side, bulls would be looking for a bounce on 10307.3 or the channel’s lower border, for the resumption of the upside move which would first target the 10866.5 resistance, followed by the all-time high just above the 11,000 psychological resistance.