- Markets are showing signs of resilience, but uncertainty still lingers.
- Powell remains steady despite concerns, while Trump pushes for aggressive rate cuts.
- Nasdaq 100’s Key support and resistance levels will determine whether dip-buyers take control.
- Looking for more actionable trade ideas to navigate the current market volatility? Subscribe here to unlock access to ProPicks AI winners.
US markets managed a decent bounce following a somewhat dovish Powell, but as we have seen in recent trade, the Fed chair’s remarks failed to inject much vigor into the futures during the early European trade, causing markets on both sides of the pond to turn noticeably lower. So, it was not exactly the most inspiring start to the day, but let’s see if dip buyers will return later in the day.
After all, in recent days, we have seen the markets trying to establish a base following weaker inflation data and renewed optimism for peace in the Ukraine conflict. We also witnessed a decent rally for some of the tech mega caps yesterday, with Amazon (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOGL), for example, both holding their key support levels of $190 and $160, respectively. So, despite the volatility, there are some tentative signs that the market is potentially on a path to recovery, but more evidence is needed to confirm that a low has been reached.
Powell Shrugs Off Risks as Trump Calls for Cuts
Jerome Powell was true to form during the FOMC presser, aiming to steady the ship by suggesting the US economy remains in good shape and that long-term inflation expectations are well-anchored—despite the University of Michigan’s latest survey painting a more worrying picture. Powell even downplayed Trump’s tariff-induced price pressures, describing them as likely ‘transitory’.
Meanwhile, President Trump stirred things up on social media, calling on the Fed to cut rates—a move reminiscent of President Erdogan’s tactics in Turkiye, which didn’t exactly end well for their markets or the lira. Trump’s call had little immediate impact on risk sentiment, but we’ll see if Wall Street reacts more decisively once the cash session kicks off. In case you missed it, here’s Trump’s post:
“The Fed would be MUCH better off CUTTING RATES as U.S. Tariffs start to transition (ease!) their way into the economy. Do the right thing. April 2nd is Liberation Day in America!!!”
Selling Pressure Fading?
Despite the latest drop in US futures, markets appear a lot more stable after a tough four-week period that saw the S&P 500 enter correction territory. However, worries persist that Trump will keep raising trade tariffs, and the economic implications they will have. The big worry is that global growth could potentially slow and at the same time, inflationary pressures are driven up. For this reason, traders have been nimble, taking profit after every bounce we have seen lately. Still, the relatively calmer tone compared to a couple of weeks ago is encouraging news nonetheless, giving dip-buyers a bit more confident to show up as stocks ease to key support levels.
Nasdaq 100 Technical Analysis
Is the Nasdaq 100 poised for a more meaningful recovery from here or will the selling resume again, now that it is testing the underside of the broken trend line that had been in place since the start of January?
Well, the re-test of this trend line has held as resistance in the last 3 and a half sessions. But at the same time, we have seen progressively less selling pressure to suggest that the bears’ control is eroding.
A hallmark of this extended bull market has been the relentless dip-buying that has accompanied every sharp sell-off, propelling indices back to new highs time and again. Be it the covid crash, the 2024 yen carry trade unwind, Russia’s invasion of Ukraine, or the inflation-led downturn of 2022—investors have shown a knack for stepping in when it matters. The question now is whether we’re setting up for another bullish resurgence, or if this is merely a pause before a deeper pullback.
Key Levels and Trade Ideas to Watch
As one can see from the Nasdaq 100 futures daily chart, the first key resistance comes in around the psychological 20,000 mark, where the underside of the above-mentioned broken trend line also converges. If we manage to clear this hurdle, then the bulls’ next target is the 200-day moving average, circling 20,400. Should dip-buyers show up in earnest, these levels could well be tested soon.
The first level of support now comes in at 19750, prior resistance. If this level breaks decisively, then that could potentially pave the way for another drop to the 19,150 to 19,400 support range. This area has already been tested on multiple occasions last week, and it is a zone that aligns with the 61.8% Fibonacci retracement of the August rally.
***
Disclaimer: This article is written for informational purposes only; it does not constitute a solicitation, offer, advice, counsel or recommendation to invest as such it is not intended to incentivize the purchase of assets in any way. I would like to remind you that any type of asset, is evaluated from multiple perspectives and is highly risky and therefore, any investment decision and the associated risk remains with the investor.