Muted Trading Volume on Nasdaq 100 Induced By Poor Consumer Confidence Data

Summary:

Poor consumer confidence data is weighing on investor sentiment on the Nasdaq 100, immediately after yesterday's record-breaking performance.

The Nasdaq 100 is down 0.35% as the composite index takes a break from the recent surge that pushed it to all-time highs. Weighing on the index is the August Consumer Confidence data from the Conference Board, which showed a fall from the revised figure of 91.7 in July to 84.8 in August. This number was also well below the projection of 93.0 and indicates that consumers are less optimistic about the US economy than they were in May and June, soon after the US economy started to reopen.

This dip in consumer confidence follows an increase in the coronavirus cases in the US, as well as the delay in the passage of the additional stimulus package that should have seen households earn at least $1200 a month. The accelerated decline in consumer confidence followed a drop in the Expectations index from 88.9 in July to 85.2 in August. The Present Situation Index also declined sharply. The short-term outlook was also more pessimistic, as consumers expecting business conditions to improve in the next six months dropped from 31.6% to 29.9%. The same story went for the employment outlook and short term income prospects.

Technical Outlook for Nasdaq 100

So far, today’s daily candle shows lower highs as against yesterday’s record-breaking candle. This may yet change before the end of the day. At 11625.6 currently, the Nasdaq 100 lies at about 180 points above the nearest support at 11453.2. It may take much more than a poor consumer confidence report to push the index towards this support level, even as the index continues to trade within the confines of the ascending channel. A breakdown of the 11453.2 support brings in 11176.3 as a new support target, which interfaces with the channel’s lower edge. Only a failure of the channel allows 10866.5 and 10505.4 a chance at forming new downside targets.

On the flip side, a push towards the 11567.3 resistance (127.2% Fibonacci extension from the price swing from the December 2018 lows -> February 2020 highs -> March 2020 lows) is to be expected if bullish momentum prevails once more. The 141.4% extension is found at 12120.2, a target which appears distant for now but not impossible to achieve, given the Nasdaq 100’s meteoric rise since March 2020.