S&P 500, Nasdaq 100 and Dow Jones Boosted by Weak US PMI’s

S&P 500, Nasdaq 100 and Dow Jones Talking Points

  • S&P 500 edges higher ahead of FOMC meeting minutes
  • Dow Jones retail sentiment turns bullish despite fundamental risks
  • Nasdaq 100 runs into trendline resistance while liquidity remains thin

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US PMI Drives USD Lower Ahead of FOMC Minutes While Volume Remains Light

The economic data dump on the eve of Thanksgiving has lifted US equities as liquidity and volume decline. With seasonality and the US holiday weekend contributing to a decline in trading volume, resilient major indices are holding steady across the board.

With the three main US stock indices, S&P 500, Nasdaq 100, and Dow Jones on track for another week of gains, sentiment continues to be driven by mixed earnings and interest rate expectations.

Throughout the week, a slew of Fed speakers have reinforced the need to tame inflation by raising rates despite the risks of a recession. With the FOMC meeting minutes expected to reiterate the need for further tightening, weaker PMI data lifted stocks, driving SPX back above the 4000 psychological level.

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As price action hovers above the 38.2% Fibonacci retracement of the August – October move at 4006.81, a move higher may allow for a retest of prior support turned resistance at the May low of 4056.88.

S&P 500 Daily Chart

Chart prepared by Tammy Da Costa using TradingView

Meanwhile, as Nasdaq 100 moves above 11700, the US tech 100 is currently testing trendline resistance 11860 while the 50% Fibonacci of the 2020 – 2021 move holds as imminent support at around 11768.

Nasdaq (US Tech 100) Daily Chart

Graphical user interface, chart  Description automatically generated

Chart prepared by Tammy Da Costa using TradingView

Dow Jones (Wall Street 30) Sentiment

of clients are net long.

of clients are net short.

Change in Longs Shorts OI
Daily -3% 3% 1%
Weekly -20% 19% 7%

Wall Street: Retail trader data shows 23.50% of traders are net-long with the ratio of traders short to long at 3.25 to 1. The number of traders net-long is 12.09% lower than yesterday and 20.45% lower from last week, while the number of traders net-short is 8.42% higher than yesterday and 20.04% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests Wall Street prices may continue to rise.

Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger Wall Street-bullish contrarian trading bias.

Additional Reading for Stock Traders

— Written by Tammy Da Costa, Analyst for DailyFX.com

Contact and follow Tammy on Twitter: @Tams707

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