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Chart of the Day: NAS100 daily

We’ve seen better selling emerge in the Nasdaq 100 (NAS100), with the cash session closing down 1.7%. This is a strong underperformance relative to the S&P 500 (-1%), Dow Jones (-0.7%) and Russell 2000 (-0.6%). Volumes were some 10% below the 30-day average, but breadth was bearish with 89% of stocks in the index lower on the day.

Chart of the Day - June 26, 2019 - NAS100 daily

We can focus on a decent drop in US consumer confidence and new homes sales as catalysts for the move lower. With comments from Federal Reserve member James Bullard detailing that “the situation doesn’t call for a 50bp cut” at the July FOMC meeting, this will have prompted equity sellers. So, while Mr Bullard is calling for insurance cuts when US interest-rate markets have discounted a 30% chance of a 50bp cut, some have felt these comments could be seen as a trial balloon — to see how the market reacted and the equity market really wants to see bold action from the Fed. The interesting aspect is that the volatility has been seen squarely in US equities, with limited moves in the US bond market.

The fact oil is strong (WTI crude closed +0.8%) has seen the selling centred on tech; hence, my focus on the NAS100. On the daily chart, we’ve seen a bearish momentum crossover, although I’d like to see stochastic momentum accelerate further now the price has closed through the short-term uptrend. The May/June double-top has supported at 7600. But with a break here, traders will likely add to short positions for a potential test of the major double-bottom closer at 6934.

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