Nasdaq 100, S&P 500, Peloton, ES, NQ, Federal Reserve – Talking Points
- Nasdaq 100 plummets as Peloton shares routed on product shutdown rumors
- S&P 500 slices through key technical levels, December low taken out
- Equities continue to wobble as uncertainty creeps in ahead of January FOMC meeting
Tech stocks plunged lower on Thursday, dragging major benchmarks with them into negative territory. All seemed rosy for U.S. markets in the early hours of the session, but a mid-day reversal sparked a rout that saw the Nasdaq 100 Index and S&P 500 Index cut right through key levels. The Nasdaq 100 Index erased early session gains that closed in on 2%, to ultimately finish the session down 1.3%.
The sharp reversal in the tech-laden index leaves it over 10% below all-time highs, officially placing the benchmark in correction territory. The index was hit hard by news that Peloton may halt production on some “connected fitness products.” Shares were halted as they plunged by more than 20%. Selling soon spread into the indices, sparking stunning reversals. Nasdaq 100 futures (NQ) sliced through key levels on its way down, taking out 15,000 into the close and with it the 200-day moving average. With little support below, market participants may find some solace in the October lows around 14,370.
Nasdaq 100 Futures (NQ) 1 Hour Chart
Chart created with TradingView
Selling in the Nasdaq carried over into the S&P 500, with the index ultimately closing down by more than 1%. With selling rife throughout the afternoon in the New York session, the index cut through key levels in the form of the weekly lows around 4,515 and the key psychological level at 4,500. Relentless selling also saw the index futures (ES) take out the December low of 4,492. This break could be crucial, as it opens the door to lower prices. This break of the succession of higher lows from that December trough could prove to be crucial in the coming sessions.
S&P 500 Index Futures (ES) 1 Hour Chart
Chart created with TradingView
ES may remain jittery as markets jostle ahead of next week’s January FOMC policy meeting. A reshuffle of bets pertaining to tighter monetary policy has seen ES pullback from 4,600 over the last few weeks. With little turbulence surrounding current prices due to October’s meteoric rise through this prize zone, we could see a continuation of this move lower with little resistance.
With a bearish lens, market participants may look to the October low of 4,260 as a downside target for ES. Bulls may hope for a dovish surprise from the Fed next week, with recent economic data suggesting the economy may be cooling. This could prompt Fed officials to be more cautious on rate hikes and tightening in general, which could see equity markets bounce. While that is not the base case of most market participants, it nonetheless remains a scenario. All cards remain on the table ahead of next week, and equity markets continue to show that they truly dislike uncertainty.
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— Written by Brendan Fagan, Intern
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