The Nasdaq 100 looked set for a lower open this Friday after the NFP jobs data revealed what many had feared all along: unemployment was rising in the US. However, investors have mounted a brief rally to shake off the news, even though upside movement appears muted.
The -701K employment change and an unemployment rate of 4.4% was a reflection of two weeks of gradually worsening initial jobless claims data. However, this month’s NFP also revealed that the participation rate in the polling that gave the numbers was at 62%: less than 2/3rds of the employable population. This may show that in reality, the number of jobs lost to the coronavirus-induced business closures and lockdowns could well be in the millions. Yesterday’s jobless claims data showed that 6.6 million people had filed for unemployment benefits for the first time. These news releases are sobering and may cause investors who had been driving the Nasdaq 100 in a slow but steady recovery to rethink their moves.
The Nasdaq 100 is trading at 7561.6, down 1.1% at the moment, having bounced off intraday lows at the 7508.9 support level. However, any upside moves continue to be constrained as investors try to decide on where to push prices.
As identified in yesterday’s analysis, the Nasdaq 100 has chosen to trade within the range formed by the 7508.9 support acting as the floor, and 7834.6 acting as the ceiling. Lack of volume in today’s trading session may keep things this way heading into next week, even though the grim NFP jobs data may push the price towards the lower end of the range.
If volume picks up one way or another, a breakout of 7834.6 or a breakdown of 7508.9 would be on the cards. If there is a breakdown of 7508.9, this opens up an opportunity for price to seek a new target at the 7241.2 support level (previous low of 6 August 2019). 6904.0 represents a support level formed by the cluster of daily lows of mid-March.