S&P 500, Nasdaq 100 Choppy on Thin Trading Volume with Europe Closed

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S&P 500, Nasdaq 100, Treasury Yields, China GDP, Bank of America – Talking Points

  • Equities continue to chop on thin volume, major European markets closed
  • Bank of America posts strong quarterly results, following other major banks
  • Chinese GDP beats expectations as Covid fears continue to weigh on sentiment

US equity benchmarks were choppy early on Monday as traders prepare for a blockbuster week of corporate earnings. With major European markets closed Monday for the Easter holiday, volume has been thin, a perfect storm for volatility. Prior to the opening bell, Bank of America soundly beat quarterly expectations, following in the footsteps of other Wall Street institutions that reported last week. Overnight, China released GDP data that also surpasses estimates to the surprise of many. China has been in the spotlight of late, as numerous major cities remain under lockdown as Covid continues to spread swiftly.

This week sees a large batch of corporate earnings, highlighted by Netflix, Tesla and Snapchat. Sentiment remains weak heading into this earnings period, as a myriad of factors continue to challenge growth and inflation prospects. A strong earnings period may offer some respite for beaten-down US equity indices ahead of the May FOMC meeting.

S&P 500 Futures 1 Hour Chart

Chart created with TradingView

The S&P 500 (ES) continues to trend lower as market participants digest the realities of tighter monetary policy. Remember, the saying “don’t fight the Fed” works both ways. Despite the overall trend pointing down, there have been many actionable opportunities over the last few weeks. In the overnight session, ES bounced firmly off the 4360 area, ultimately finding resistance in the 4404 level that proved to be a key pivot point last week. Should we retest the overnight lows at 4355, a quick test of 4340 may be on the cards. Bears may remain in firm control of direction unless bulls can break the trend and attack that 4440-444 zone once again.

Nasdaq 100 Futures 4 Hour Chart

Chart created with TradingView

Nasdaq 100 futures (NQ) also remain firmly on the backfoot, as higher US Treasury yields pressure growth stock valuations. Since testing the 14000 threshold earl in the NY session, NQ has retreated to back to trend. Weakness remains widespread as we head into a week of Fedspeak and key tech earnings. Traders will be focusing on Netflix and Tesla as we prepare for the bulk of upcoming FAANG earnings. With NQ being firmly rejected at 14000, we may get a retest of the overnight lows at 13729. As is the case with the S&P 500, current trends indicate lower prices may be ahead. Traders may look to reload on longs around the 13100 zone, which provided a launching spot for March’s robust ramp higher.

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— Written by Brendan Fagan, Intern

To contact Brendan, use the comments section below or @BrendanFaganFX on Twitter