Nasdaq 100: A Push to 11480 Is On the Cards

Summary:

The Nasdaq 100 index is trading lower this Thursday, dragged down by sentiment around possible Fed tightening and Amazon's antitrust lawsuit.

The Nasdaq 100 index is trading lower this Thursday after Wall Street neglected the mixed retail sales data and the Empire State Manufacturing Index’s recovery. The 1.66% slump reflects the market sentiment in anticipation of possible Fed action in a week.

A 75 basis points rate hike appears on the cards after August’s red-hot consumer inflation data and a resilient labour market shown by lower than expected jobless claims kept bets for this move up. Nomura Securities are among a few who predict a 100 bps rate hike, but Fed funds futures have this large move priced in by just 28%.

Helping to keep the Nasdaq 100 index lower this Thursday are downbeat performances by Amazon. The stock is down more than 1% this Thursday as it faces another antitrust lawsuit, this time from the state of California. The lawsuit accuses Amazon of breaching the state’s antitrust by using a pricing model that makes it uncompetitive for vendors to sell their products cheaper elsewhere, thus making the prices of these goods higher for Californians.

So far, the drop in the Nasdaq 100 index has been limited to this week’s lows. Ahead of the FOMC decision, the University of Michigan’s Consumer Confidence Survey will hit the markets as the last major fundamental trigger for the week.

Nasdaq 100 Index Forecast

Wednesday’s uptick has met rejection at the 12186 resistance level (8 July high and 27 July low), allowing for a resumption of the move that violated this price level and turned it into resistance. The selloff now has ample room to the south to target the 11480 support (20 May and 13 July lows). An intervening pitstop exists at the site of the 12 May/6 July lows at 11701. Below 11480, the decline may find support at 11075 (16 June low) or at 10698, the site of the 21 September 2020 low.

On the other hand, any recovery will require a break of 12186. This move would see 12574 (11 May and 29 August 2022 highs) become a new target before the 30 May/13 September 2022 highs at 12874 enters the picture as an additional upside target. The 3 May/26 August highs at 13188 constitute another northbound target, as does 13509 (19 August high) if the advance move continues.