Bulls on Nasdaq 100 Go On Recess As Index Drops 1.5%
After the investors on the Nasdaq 100 cheered the FOMC decision yesterday and sent the index to a new record high, bulls seem to have taken a vacation as the index is down 1.14% on the day. The downside move follows similar corrections in global stock markets, as well as some economic news which tainted the previously bullish sentiment.
Focus on the coronavirus-induced unemployment figures returned on Thursday with the release of the Initial Jobless Claims for last week. Unemployment claims filed for the first time by recently unemployed Americans hit 1542K, which was less than the consensus of 1550K and the previous figure of 1897K. The numbers have been declining since the April 2 peak of 6867K (an upward revision). However, it does not change the fact that millions of Americans are still filing for unemployment benefits.
It would appear that markets are starting to pay more attention to Continuing Jobless Claims, which are rising despite Friday’s positive NFP report. Total continuing jobless claims registered at 20900K versus a consensus of 20000K. Also, the Fed’s rather gloomy economic outlook despite the stimulus packages was enough to spook the bulls on the Nasdaq and initiate a selloff.
Price action for yesterday peaked at 10,156.0. However, today’s daily candle started with a lower open and is now pushing hard to the downside, heading down to sub-10,000 levels. At 9891.6, the Nasdaq 100 appears to be heading for a retest of the 9730.2 support; the all-time high recorded on February 20 2020.
A bounce on this level provides a basis for a recovery that retests the new all-time highs. However, a breakdown of 9730.2 allows the price to aim for the 9626.4 downside target. Further decline sends the Nasdaq 100 towards other support targets, found at 9452.0, which is where the channel’s lower border may intersect it. Only a breakdown of 9542 will allow for a test of distant targets down south at 9264.4, 9167.4 and possibly 9092.3.