Nasdaq 100 Reacts to Key Resistance as Market Awaits Fiscal Stimulus

Nasdaq 100 Index, Congress, Fiscal Stimulus, Covid-19 – Speaking Factors:

• Month-end flows and a heated US presidential debate hampered world fairness markets throughout Asia-Pacific commerce.
• Congressional stimulus deadlock could restrict the current restoration seen throughout US benchmark fairness indices.
• Nasdaq 100 index poised to maneuver decrease as worth struggles to interrupt above key chart resistance.

Asia-Pacific Recap

Australia’s benchmark ASX 200 index collapsed 1.8% throughout Asia-Pacific commerce regardless of strong Chinese language information, as month-end flows and a heated US presidential debate weighed on world danger property.

The haven-associated Japanese Yen and US Greenback gained in opposition to their main counterparts, whereas the risk-sensitive Australian Greenback dipped 0.25%.

Gold slipped decrease and silver plunged slightly below 2% though yields on US 10-year Treasuries held agency at 0.65%.

Trying forward, German unemployment information for the month of September and US second quarter GDP headline the financial docket.

DailyFX Financial Calendar

Congressional Stimulus Deadlock Limiting Nasdaq 100 Rebound

As famous in earlier reviews, Home Speaker Nancy Pelosi’s current feedback suggesting {that a} much-needed fiscal stimulus bundle might nonetheless be delivered earlier than the US Presidential Election in November could underpin risk-sensitive property within the near-term.

Pelosi said that Democrats will put ahead a brand new proposal within the coming days and that she trusts “Secretary Mnuchin to symbolize one thing that may attain an answer, and I imagine we come to an settlement”, including that “what we will probably be placing forth is a proffer to say, now allow us to negotiate inside a timeframe and greenback quantity to get the job completed”.

Nevertheless, it stays to be seen if US policymakers can see eye-to-eye given Democrats are calling for at the least $2.2 trillion in new assist and President Donald Trump has said that he would solely go as excessive as $1.5 trillion.

However, with small enterprise income in the USA notably plateauing at 20.6% beneath pre-coronavirus ranges – since peaking in early July – and persevering with jobless claims hovering at ranges nearly three occasions increased than the height seen through the 2008 world monetary disaster, the dearth of further stimulus seems to be considerably hampering the nation’s nascent financial restoration.

Furthermore, the impression of over 40,000 Covid-19 infections every day is mirrored in high-frequency information, with all three mobility information factors – driving, strolling and transit – persevering with to slip decrease after peaking on the finish of August.

To that finish, the short-term outlook for US benchmark fairness indices could grasp on Congressional stimulus negotiations, with the profitable supply of an all-encompassing fiscal assist bundle most likely driving the Nasdaq 100 index again to recent yearly highs.

Supply – Apple Mobility Information

Nasdaq 100 Futures Each day Chart – Bear Flag Hints at Additional Losses

From a technical perspective, the tech-heavy Nasdaq 100 index appears to be like poised to increase its fall from the file excessive set on September 2 (12465.25), regardless of clambering again above the trend-defining 50-day shifting common (11251) in current days.

In reality, with worth carving out a Bear Flag continuation sample and quantity failing to substantiate the current rebound from the month-to-month low (10656.5), the trail of least resistance appears skewed to the draw back.

Incapacity to interrupt above key resistance on the September 16 excessive (11539) might intensify promoting strain and generate a push again in the direction of the 100-DMA (10592), with a every day shut beneath most likely validating the bearish continuation sample and bringing the psychologically pivotal 10000 stage into focus.

Conversely, a every day shut above the 11500 mark could encourage would-be patrons and generate a push again in the direction of the August 27 excessive (12046), with a break above opening a path to check the yearly excessive (12465.25).

Nasdaq 100 futures every day chart created utilizing TradingView

Nasdaq 100 Futures 4-Hour Chart – 200-MA Stifling Shopping for Stress

Zooming right into a 4-hour chart reinforces the bearish outlook depicted on a every day timeframe, as confluent resistance on the 200-MA (11440) and downtrend extending from the yearly excessive (12465.25) suppresses bullish momentum.

Furthermore, with the RSI swerving away from oversold territory and crashing again beneath 60, a push again in the direction of the month-to-month low (10656.5) might be within the making.

That being mentioned, with worth nonetheless monitoring above the 100-MA and persevering with to respect the short-term uptrend that has guided worth increased because the September 24 low (10660.25), a push above Bear Flag resistance (11550) might eventuate within the coming days.

However, an extension of the autumn from the yearly excessive appears to be like the extra probably state of affairs if the 200-MA (11440) continues to stifle shopping for strain, with a break beneath the 100-MA (11176) most likely leading to a retest of the month-to-month low (10656.6).

Nasdaq 100 futures 4-hour chart created utilizing TradingView

— Written by Daniel Moss, Analyst for DailyFX

Comply with me on Twitter @DanielGMoss