Nasdaq 100 Takes a Breather on Downbeat US Data

The Nasdaq 100 seems to have finally taken a breather after US initial jobless claims for this week came in at 2438K (versus a consensus of 2400K and a revised previous number of 2687K). This report indicates that the tide of job losses and filing for unemployment benefits has still not ebbed. Not even the continued surge of Facebook stocks has stalled this trend, and the Nasdaq 100 finds itself trading just about flat at 9486.5. 

Furthermore, the US Flash Manufacturing PMI came in at 39.8, which was not too far from the consensus number of 39.3. It is an improvement over the previous number of 36.1, which was revised lower. The deviation targets to make this news tradable were unmet, and this has not elicited any response from investors on the Nasdaq 100 index asset. 

Rounding off the news is the Philly Fed Business Outlook Survey, which showed an easing of the contraction experienced in the region. The index came in at -43.1, which was worse than the consensus of -41.0 but a vast improvement from April’s figure of -56.6. 

So there we have it: a day of uninspiring news which is also producing an uninspiring performance on the Nasdaq 100 after several days of gains. 

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Technical Outlook for the Nasdaq 100

A price action approaches the top edge of the ascending channel, the bulls seem to have taken a breather and the candle for the day has contracted into a doji. Yesterday’s 1.89% gain took the Nasdaq 100 above the 9452.0 resistance, but the index would need another day of price action that keeps the value above this resistance to confirm the breakout. 

If the Nasdaq 100 can pull this off despite uninspiring news, this would open the door for a further advance towards 9626.4 (12 February and 21 February highs). Above this level, we would see the Nasdaq 100 on the verge of taking back its 2020 highs.

On the flip side, failure to sustain the price penetration above 9452.0 would allow for a pullback towards 9264.4. There is the possibility of 9167.4 and 9092.3 also being drawn into the action if a selloff resumes. A break of the extended channel’s lower border opens the gateway towards 8945.7 and quite possibly 8691.0.

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