The Nasdaq 100 futures remained above their prior 2019 high ahead of the cash opening. The move higher comes amid a slowing US economy with the ISM indicators being soft and the US NFPs anticipated to decline further in the next two months. On the other hand, a short-term truce between the US and China, lower Brexit uncertainty, and massive stimulus from world central banks are having a positive effect on the stock markets.
The move higher in the Nasdaq 100 is not unique, and we see strong movements in stock markets that tend to lead the cycle, such as the export-oriented Swedish OMX 30, and the Taiwanese stock market.
As for the Nasdaq 100, the price completed a triangle pattern breakout on Friday. The triangle is constructed by an upward sloping trendline via the August and October lows, and a descending trendline via the July 24 high and September 24 highs. The pattern is now suggesting that the Nasdaq 100 could rise to 8530 in the next few months. This pattern will remain in play as long as the price trades above the October 23 low of 7614. Short-term traders that are not already long will probably wait for a correction that does not extend below the October 24 low at 7902 to obtains a better risk-reward ratio before adding to their exposure.
Potential event risk is this week’s Fed rate meeting, and Friday’s ISM and NFP report. For now the markets are focusing on the positives of lower interest rate and QE, however, if the ISM or NFP comes out too low, then that will question the current rally.