Nasdaq 100 Continues Selloff Despite Upbeat ADP Employment Change

Summary:
• The sell-off on the Nasdaq 100 continues today from coronavirus-related fears, despite an upbeat ADP Employment change figure.

The Nasdaq 100 continues to sell-off on the day despite better-than-expected ADP Employment Change data. The ADP Employment Change came in at -27,000, which was lower than the -150K that the markets were expecting. It was also lower than the previous month’s figure of -183K.
So why are traders on the Nasdaq 100 and other US markets not enthused by the news release? Analysts at several banks believe that today’s ADP Employment Change data are based on figures collated before the enforced lockdown of 30 states in the US and therefore may not be representative of the current situation. I tend to agree with them and would suggest that the Initial Jobless Claims may be a better marker of the current employment situation in the US than the ADP Employment Change or the NFP data which is due Friday.
The Nasdaq 100 futures are down by 2.78% on the day as at the time of writing. The sell-off is fuelled by the rise in cases of the coronavirus in the US and Europe. Italy and Spain have witnessed a record number of coronavirus-related deaths in the last three days, prompting the Italian government to extend lockdowns in certain areas. The US markets were also spooked by yesterday’s comments by US President Donald Trump in which he told Americans to expect a “very, very painful two weeks”.

Download our Q2 Market Global Market Outlook

Technical Outlook for Nasdaq 100

With the Nasdaq 100 futures selling off on the day, the index looks set for a lower open after an end to the worst quarter for the Nasdaq 100 index since the 2008 global financial crisis. The decline of the Nasdaq 100 yesterday meant a lack of time filter confirmation of the break of the 7834.6 resistance. Today’s drop could bring the Nasdaq 100 into contact with the 7508.9 support level. A breakdown of this support could open the door towards the 7241.2 support (6 Aug 2019 low). The support at 6904.0 could become relevant if 7241.2 gives way to further bearish action.

On the flip side, any price recovery allows the Nasdaq 100 to retest the 7834.6 resistance. A successful break allows the price to target yesterday’s high at 8015.5. The 3 Dec 2019 low at 8160.2 could become relevant as a new resistance target if the recovery extends above 8015.5. 

We look towards tomorrow’s initial jobless claims data for further direction on this asset.