Nasdaq 100 Boosted On Positive China PMI, Possible Fed Yield Curbs

The Nasdaq 100 has had another great day as it makes it 2 in 2 as far as gains are concerned. Wall Street is seeing some good upside movement after upbeat Chinese Manufacturing PMI data boosted risk sentiment and allowed traders to move in with bids for stocks listed on the Nasdaq 100.

The Nasdaq 100 composite index is presently trading 0.76% higher as it breaches the 10,000 psychological resistance on a day that Treasury Secretary Steven Mnuchin and Fed Chair Jerome Powell are providing testimony before the House Financial Committee. The testimony session is being held to get a first-hand assessment of how stimulus measures put in place so far have helped the US economy.

A Wall Street Journal report that the Fed may be open to exploring yield cap options is also boosting the Nasdaq 100. The thinking in the markets is that if the Fed decides to place a cap on yields, this would drive demand for equities and send stocks even higher. The minutes of the last Fed meeting will be out on Wednesday, and investors will be keen to see if this proposition came up for discussion.

Outlook for Nasdaq 100

The Nasdaq 100 continues the advance that builds on yesterday’s bounce from the lower border of the ascending channel. This channel continues to serve as the basis for price movement on the index.

The index is set to challenge the 10156.50 resistance level. A break of this resistance allows the index to continue its advance to the channel’s return line, but this move will have to contend with the 10291.5 and 103030.5 resistance levels, representing the 223.2% Fibonacci extension of the decline from February to March 2020, and the existing all-time high respectively.

On the flip side, failure to break 10156.50 allows for a possible pullback towards the 9867.1 price level, where the channel’s trend line is also found. A breakdown of the channel could lead to a brief selloff that targets the 9730.2 and 9626.4 price levels in the near-term, with 9452.0 and 9264.4 remaining relevant to the scheme of things if the decline persists.

Tomorrow’s Fed minutes could play an important role in price action for the rest of the week, before the markets take a break on Friday for the US Independence Day holiday.

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Nasdaq 100 Daily Chart

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