S&P 500, Nasdaq 100 – Talking Points
- S&P 500 fails to hold 3900, falls to support at 3860
- Nasdaq 100 falls below 12000 despite falling Treasury yields
- Lagarde, Powell, Bailey all scheduled to speak on Wednesday
Risk assets pulled back after the opening bell in New York as investors remain on edge over geopolitical and recession concerns. Disappointing economic data added fuel to the fire for bears, as consumer confidence fell to 98.7 in June, down from 103.2 in May. Market participants will now look to Wednesday as ECB President Christine Lagarde will be speaking with Fed Chair Jerome Powell and Andrew Bailey of the Bank of England at the ECB’s 2022 Forum on Central Banking.
Inflationary pressures have put the American consumer on edge, as fears of a recession grow. On Wall Street, strategists continue to wonder what the impact of the Fed tightening aggressively into slowing growth will be. While policymakers have been reluctant to discuss the prospects of stagflation and/or a recession, the chatter among traders and investors certainly is growing. Despite the recent rally in equities, the unease of many may lead to additional selling pressure in the sessions ahead.
S&P 500 futures (ES) rose initially following the opening bell in New York, but selling pressure ultimately saw premarket gains evaporate. 3900 acted as brief support, but price quickly cascaded down to a more significant pivot level at 3860. It would appear that risk is struggling as investors flock to safety, with the US Dollar and US Treasury securities catching bids.
The recent rise in risk assets may have been due to end of quarter/month flows, as many traders may have looked to close out winning shorts ahead of the new month. While price was able to close a gap between 3877 and 3906, bulls were not able to push toward the 50-day moving average at 4042. Near-term, 3940 remains overhead resistance. Continued pressure from bears may see a retest of key Fib support at 3802, the 38.2 retracement from the advance off of the March 2020 lows.
S&P 500 Futures 30 Minute Chart
Chart created with TradingView
Despite a relief from surging US Treasury yields, Nasdaq 100 futures (NQ) were unable to continue recent bullish momentum above 12000. Price struggled to push beyond 12129, which has acted as a key pivot point for NQ in the recent past. The rejection of this area this morning saw price immediately retrace back below 12000, with support coming into view at 11700.
The Nasdaq 100 remains the whipping boy of this tightening cycle, as growth companies, both public and private, continue to receive significant valuation haircuts. As we inch closer toward the July FOMC meeting, NQ may continue to struggle as the reality of higher rates and tighter financial conditions continues to set in.
Nasdaq 100 Futures 4 Hour Chart
Chart created with TradingView
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— Written by Brendan Fagan, Intern
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