NAS100 Cautious Ahead of Netflix and Tesla Earnings

  • NAS100
    (${instrument.percentChange}%)

NAS100 Analysis

The US central bank has been preparing markets for more aggressive monetary tightening, after last month's rate lift-off, with Mr Bullard not ruling-out a 75 basis point hike yesterday, although it is not his "base case". [1]

Markets are very aggressive in their pricing and CME's FedWatch Tool projecting a half-percentage point adjustment at May's upcoming meeting, with 91% probability at the time of writing. [2]

A high interest rates environment is typically not good for growth and the tech sector, with NAS100 having erased around 9% of its value during the first quarter.

Following the positive return from the long weekend, the index trades with caution today as markets are on edge, monitoring China's Covid-19 situation, the war in Ukraine and Fed's tightening prospects.

On the daily chart, the index has been having a poor month and has been testing the lower border of the Ichimoku cloud, daily closes above which can lead to further losses. Another factor that potentially points to further downside bias, is the Death Cross that was formed in late February-early March. It is the move of the faster EMA50, below the slower EMA200, which is often a precursor of sustained weakness.

Looking at the four-hour chart, immediate bias remains on the downside, since NAS100 trades below the EMA200 (black line) and is exposed to 13,464, although fresh impetus may needed for new 2022 lows (12,941). Despite that, the index tries to resist to downward pressure and it could find the chance to push for the EMA200 (at around 13,350-13,400). Daily closes above it, can pause the downward momentum, but the index does not inspire much confidence at this stage for a test of 14,856.

The US earnings season is underway in the US, and the technology sector is front and center this week and the next. Netflix is the first of the FAANGs to report, as its results are due today after market close, with EV king Tesla following on Wednesday.

Investors will be eagerly anticipating Netflix's subscription figures, after January's disappointing forward guidance that had caused the stock to plunge, while Tesla's release comes in a backdrop of record Q1 deliveries, two new factories and its CEO's efforts to acquire Twitter.

Nikos Tzabouras

Senior Market Specialist

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 19 Apr 2022 https://www.youtube.com/watch

2

Retrieved 19 Aug 2022 https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html#

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