S&P 500 and Nasdaq 100 – Fundamental Forecasts and Analysis
US equity markets have recovered their opening losses and are turning higher going into the weekend after the latest US NFP report showed that 517K new roles were created in January compared to market estimates of 185k. The closely watched unemployment rate also fell to 3.4% from 3.5% in December.
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These red-hot job numbers will be watched closely by the Fed and if this trend continues will give the US central bank further reason to increase interest rates and keep them higher for longer.
The pick up in the US jobs market is not being seen in the US tech sector however where large-scale layoffs continue. In recent weeks Alphabet announced that they will trim 12k from their payroll, Amazon has started cutting 18k jobs, while Microsoft will cut 10k. These are the headline cuts so far although there are a swathe of other tech companies that are embarking on their own cost, and job, cutting exercises.
Apple, Amazon, and Alphabet all announced their latest quarterly results after the market closed on Thursday and all three disappointed an expectant crowd. Downgraded growth expectations, lower earnings, and ongoing cost-cutting programs are not a springboard for higher prices in the short term. Saying that there seems to be a stubborn resilience in the current moves higher in the US indices space and sometimes it’s best not to get in the way of a strong move.
The S&P 500 is pushing back against the strong economic/weak earnings story and may even print a fresh multi-month high in the near future. The technical picture is looking optimistic with a trend break, positive moving average set-up, including a golden cross, and a series of higher lows and higher highs all suggesting that the S&P’s move higher will continue.
S&P 500 Price Chart – February 3, 2023
S&P Retail Sentiment Bullish
of clients are net long. of clients are net short.
| Change in | Longs | Shorts | OI |
| Daily | 2% | -4% | -2% |
| Weekly | -10% | 1% | -3% |
Retail Trader data show 37.21% of traders are net-long with the ratio of traders short to long at 1.69 to 1.The number of traders net-long is 5.63% lower than yesterday and 16.43% lower from last week, while the number of traders net-short is 1.88% lower than yesterday and 2.55% higher from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests US 500 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 US 500-bullish contrarian trading bias.
What is Earnings Season and What to Look for in Earnings Reports?
The Nasdaq 100 tried and just failed to fill the gap created between the Wednesday and Thursday daily calendar and, like the S&P is pushing back towards multi-month high levels. The Nasdaq used the 200-day moving average as a springboard for its latest leg higher, and while the 20-, 50-, and 200-day set-up is not as positive as the S&P, the acceleration higher of the short-dated ma highlights the current strength of the market.
Nasdaq 100 Daily Price Chart – February 3, 2023
What is your view on the S&P 500 and the Nasdaq 100 – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.
Trading analysis offered by Flex EA.
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