Interest rates continue to put pressure on risk assets and stocks are sharply off of this year’s highs.
While seasonality and high valuations may play a role in this sell off, stocks will continue to trade on
inflation and interest rate expectations determined by economic data, and the feds interpretation of
said data. Next week’s jobs numbers will be very important to watch for interest rate expectations at the
next fed meeting. We will see nonfarm payrolls, the unemployment rate, ADP nonfarm, and average
hourly earnings.
With the fundamentals covered, significant support levels will play a part in how we trade moving
forward in the tech sector. Looking at the Nasdaq 100 Futures, there is a major gap (identified in blue)
from 14530 – 14630. Within this gap territory is also a major support level (identified in yellow) at
- After 14575 is the major support level of 14275 (identified in white).
Using these levels will be crucial moving forward. If we were to break the support level of 14575, looking
at the bottom of the gap (14530) will be the next support level. As of late, the significant support level of
14575 has held and created a double bottom, which is positive price action in the near term. If the
Nasdaq were to break below both of these levels and fill the gap, the 14275 will be the next major level
and the 200 day EMA is the last line of defense.
Of course, a close below the 200 day would mean the Nasdaq has entered a bear market. As yields
remain a major headwind, these levels should provide context to help a trader navigate the uncertain
economic conditions moving forward. The CME Fed Watch Tool is a great way to view interest rate
expectations.
Have questions? Give us a call 312-278-0500 or email us at info@bluelinefutures.com
Futures trading involves substantial risk of loss and may not be suitable for all investors. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made