Nasdaq 100 outlook: Technical Tuesday - January 14, 2025

Nasdaq futures rose a further 0.5% by mid-morning European trade, following Monday’s sharp recovery. Other US indices were also higher after several global indices printed reversal-looking hammer candles on their daily charts on Monday to suggest we may have seen a bottom following the recent weakness. However, it remains to be seen whether the bulls will come out forcefully on the back of that recovery. After all, the macro backdrop has not changed materially – with bond yields remaining near their recent highs and investors having just pushed back their rate-cut expectations towards the end of the year. Investors are still cautious despite reports that Trump will be considering a more gradual ramp-up in trade tariffs in order to avert inflation spikes. So, more price action is needed to confirm a low has been hit, as this could just turn out to be an oversold recovery – especially given the recent bearish price action across several US indices. Thus, it is too early to turn positive again on the Nasdaq 100 outlook.

Nasdaq 100 outlook hurt amid rising bond yields

After a small pullback, US bond yields are on the rise again. Yields have been surging higher in recent days, with the 30-year yield hitting 5% on Friday and nearing October 2023 peak of 5.178%, while the 10-year yield hovers near 4.80% having also broken above last year’s highs despite the Fed pivoting. Rising yields aren’t just evident in the US. Japanese, European and UK government bonds are also seeing their yields climb to multi-year highs. Notably, the UK 10-year yield has reached levels last seen during the 2008 financial crisis, near 4.90%. Even Japan’s benchmark 10-year yield has hit its highest point since 2011 at 1.25%, even though interest rates there are less than 0.25%. Higher yields globally present a competitive alternative to growth stocks, which typically don’t pay dividends and come with relatively higher levels of risk compared to government debt.

Inflation data in focus

Investors’ attention remains firmly on the bond market, which have been rising due to shifting interest rate expectations. As well as robust economic data from the US, threat of tariffs and rising price of oil all point to persistence in inflationary pressures. Following Friday’s strong jobs report, the market now expects the first rate cut of this year from the Federal Reserve will be delayed until Q4. This week’s focus shifts to US inflation in the next couple of days, followed by Chinese growth figures on Friday. Today we will have US PPI, expected to increase to 3.7% year on year up from 3.4% the month before. Tomorrow’s CPI data is expected to show a rise in consumer inflation to 2.9%, and could we see even stronger data then that could fuel concerns over the revival of inflation and a more hawkish Fed. But if inflation data turns out to be weaker, then we may see some calm return to markets.

Technical Nasdaq 100 outlook: A Critical Juncture

Source: TradingView.com

After the doji/hammer candle that was formed on major US indices like the S&P 500 and Nasdaq 100, the key question now is whether we will see some upside follow-through today, or do we go back lower. In the first half of the session, we have seen some mild buying, but the day is still young, and things could change once US cash markets open for trading.

Keep a close eye on the high from Monday’s range at 20871. This level will be critical in determining the near-term technical Nasdaq 100 outlook. While above it, the bulls will be looking to build a base for the next upside move. However, if we now go back below Monday’s high – and stay below it – then this would put the bulls who bought on the back of Monday’s rally, in a spot of bother. If we do see such a trap signal, then this could potentially see the selling pressure resume and we could take out Monday’s low of 20529 fairly quickly.

Overall, the Nasdaq is holding inside what looks like a short-term bearish channel or potentially a bull flag pattern. With key support levels yet to be tested, I am not so keen on the apparent reversal signal that was formed on Monday. Had we seen such a pattern, say, around the 200-day moving average, a fair bit lower, then it would have been a different story.

In the event we see a daily close below Monday’s high and ideally (from a bearish point of view) below the July high of 20759, then that would be a bearish development.

Key resistance is seen between 20980 to 21232. The lower end of this range marks the prior support area, while the upper end was the high in November.

-- Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R

StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Please ensure you fully understand the risks involved by reading our full risk warning.

FOREX.com is a trading name of StoneX Europe Limited, and FOREX.com/ie is a domain operated by StoneX Europe Ltd, a member of StoneX Group Inc. StoneX Europe Ltd, is a Cyprus Investment Firm (CIF) company registered to the Department of Registrar of Companies and Official Receiver with a Registration Number HE409708, and authorized and regulated by the Cyprus Securities & Exchange Commission (CySEC) under license number 400/21. StoneX Europe is a Member of the Investor Compensation Fund (ICF) and has its registered address at Nikokreontos 2, 5th Floor, 1066 Nicosia, Cyprus.

StoneX Europe Limited is registered with the German Federal Financial Supervisory Authority (BaFin). BaFin registration ID: 10160255

FOREX.com is a trademark of StoneX Europe Ltd, a member of StoneX Group Inc.

The statistical data and the awards received refer to the Global FOREX.com brand.

This website uses cookies to provide you with the very best experience and to know you better. By visiting our website with your browser set to allow cookies, you consent to our use of cookies as described in our Privacy Policy.

Through passporting, StoneX Europe is allowed to provide its services and products on a cross-border basis to the following European Economic Area ("EEA") states: Austria, Bulgaria, Croatia, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden.

Additionally, StoneX Europe Ltd is allowed to provide Investment and Ancillary Services to the following non-EU jurisdiction: Switzerland.

StoneX Europe Ltd products, services and information are not intended for residents other than the ones stated above.

Tied Agent Information: KQ Markets Europe Ltd with Company No. HE427857.
Address: Athalassas 62, Mezzanine, Strovolos, Nicosia Cyprus.
Services Provided: Reception and Transmission of Orders.
Commencement Date: 06/12/2022
Website: KQ Markets - CFD Trading | KQ Markets

We may pay inducements, such as commissions or fees, to affiliates or third-party introducers for referring clients to us. This is in line with regulatory guidelines and fully disclosed where applicable.

StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation. StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.