Nasdaq composite: 50-day moving average may be a magnet
U.S. equity index futures red; Nasdaq 100 down ~1.5%
Mortgage Market index 209.3 vs 214.1 last week
Euro STOXX 600 index off ~0.5%
Dollar slips; gold, bitcoin gain; crude up ~1%
U.S. 10-Year Treasury yield ~flat at ~4.22%
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NASDAQ COMPOSITE: 50-DAY MOVING AVERAGE MAY BE A MAGNET
Since its July 10 record closing high, the day before better-than-expected CPI data provided a catalyst for some significant relative strength shifts within the market, the tech-laden Nasdaq composite .IXIC has been on the back foot.
Indeed, the composite ended Tuesday at 17,997, putting it down 3.5% from its 18,647.45 record finish.
Now on Wednesday, with Alphabet GOOGL.O and Tesla TSLA.O lower in premarket trade in the wake of their quarterly reports, and e-mini Nasdaq 100 futures NQcv1 suggesting the Nasdaq 100 .NDX is poised to open down around 1.5%, the composite appears set for further downside:
Traders are watching support at the July 19 low (17,691) and the rising 50-day moving average (DMA), which ended Tuesday at 17,489. This closely followed intermediate-term moving average should ascend to around 17,515 on Wednesday, and may be a magnet. The IXIC has not ended a session below it since May 2.
A close below the 50-DMA may put the rising 100-DMA, which ended Tuesday at 16,787, at risk.
Meanwhile, the 14-day Relative Strength Index (RSI) has declined sharply from a severely overbought level of 80 on July 10. It ended Tuesday at 52. Of note, however, at both the April 2024 and October 2023 IXIC troughs, the RSI bottomed within one point of the 30 oversold threshold.
Therefore, as stands, it may require greater weakness before traders can garner greater confidence in the potential for a washout low.
A Nasdaq composite reversal above Tuesday's 18,128.38 high can refocus on the record close, as well as the 18,671.07 July 11 record intraday high.
(Terence Gabriel)
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FOR WEDNESDAY'S EARLIER LIVE MARKETS POSTS:
EURO ZONE RECOVERY HITS THE SKIDS - CLICK HERE
STOXX FACES A STEEPENING WALL OF DEBT MATURITIES - CLICK HERE
EUROPEAN STOCKS DROP, LUXURY LAGS - CLICK HERE
EUROPEAN FUTURES SLIP ON HEAVY EARNINGS DAY - CLICK HERE
LACKLUSTRE EARNINGS KEEP INVESTORS JITTERY - CLICK HERE
IXIC07242024 https://tmsnrt.rs/3zTR1Ln
(Terence Gabriel is a Reuters market analyst. The views expressed are his own)
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