Nasdaq Turns Lower as Earnings Season Heats Up

US equity indices started higher close to all-time highs record as Q3 earnings season heats up. Nasdaq started the day in a cautious mood as US-China talks mounted hopes of a November interim deal. The trade negotiations outlook remains volatile as both sides give and take. Secretary Larry Kudlow in an interview yesterday said USA could cancel the December tariffs if trade negotiations were to continue to go well with China. The IMF lowered its 2020 forecast for China’s GDP to 5.8% last week. Investors have increased their bets for a cut by FOMC at the end of the month, they see an 85% chance of the Fed to lower interest rates in late October; that will be supportive for equities.

On the data front, United States Existing Home Sales (MoM) came in at 5.38M below forecasts of 5.45M in September while the Richmond Fed Manufacturing Index came in at 8, topping forecasts of -14 in October.

The Dow Jones Industrial Average started 0.21% higher at 26,884, while the S&P 500 trading 0.14% higher at 3,011. The CBOE Volatility Index (VIX) adds 0.02% today at 14.02 to confirm the quiet market mood.

Procter & Gamble (PG) is 3.62% higher after the company raised the 2020 sales growth expectations. United Technologies Corp. (UTX) is 1.31% higher after Q3 earnings beat expectations. Biogen (BIIB) also beat Wall Street, estimates, and the stock is adding over 25%. On the other hand McDonald’s (MCD, is -3.93% lower after Q3 earnings missed analysts expectations.

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Nasdaq Resistance and Support

Nasdaq positive short term momentum holds despite the Friday’s correction supported by its long-term uptrend as the index trades inside the ascending trend channel, which started early 2019. Nasdaq managed to re-enter the ascending channel last week giving bulls the upper hand. On the upside, first resistance stands at 8,194 the daily high and then at 8,240 the high from September 1th. Investors looking to enter long positions could buy if the index manages to close above today’s high (8,194), targeting a move above 8,2500. On the downside, first support stands at 8,138 today’s low, then at 7,664 the low from August 5th, while more bids will emerge at 7,300 lows from May. A short position might be initiated if the index settles below the 100-day moving average at 8,009.

In Europe, the major indices trading higher, the FTSE 100 is 0.68 per cent higher at 7,212 as the pound trades around 1.2953. CAC 40 in Paris is 0.17 per cent higher at 5,657 and DAX is 0.05% higher at 12,754.

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