Nasdaq Futures Slide as Investors Brace for Market Volatility

Market Overview

As of Wednesday, September 4, 2024, Nasdaq 100 futures (US100) are under significant pressure. Investors are concerned about the Federal Reserve’s potential interest rate cuts. Weaker-than-expected U.S. manufacturing data has triggered this decline, increasing fears of an economic slowdown. The mood was further worsened by disappointing earnings from major tech firms, casting a shadow over the sector’s outlook. Additionally, escalating geopolitical tensions and rising global market volatility have contributed to uncertainty. This has led to widespread risk aversion and a broad sell-off in tech stocks. U.S. stock futures suggest another challenging trading day ahead. Nvidia’s shares experienced a historic plunge, losing $279 billion in market value in a single day.

Technical Analysis

On the daily chart, Nasdaq futures have broken below last week’s low of 19,138.62, indicating a move towards the long-term upward trendline. Bearish momentum accelerated as sellers pushed through immediate support at 18,991.43, nearing the crucial 161.8% Fibonacci extension of the last bullish swing. This level might provide short-term support, potentially halting the current downtrend. However, if this support fails, the market could drop further to 18,597.49 and 18,263.07, indicating a deeper correction.

Alternative Scenario

If buyers regain control, they must push the price above the moving averages in the resistance zone at 19,345.33. A breakout above this level could signal a reversal, targeting the August high of 19,769.75. This would suggest a resumption of the bullish trend.

Key Levels

• Resistance Levels:
  • Resistance 4: 19,769.75
  • Resistance 3: 19,345.33
  • Resistance 2: 19,138.62
  • Resistance 1: 18,991.43
• Current Price: 18,856.62
• Support Levels:
  • Support 1: 18,804.20
  • Support 2: 18,597.49
  • Support 3: 18,263.07

Key Events to Watch

Investors should monitor several key economic reports due on Wednesday that could influence market sentiment:

• Factory Orders and Job Openings: These reports for July could offer fresh insights into the U.S. economy’s health. Strong data might alleviate concerns about a slowdown and support Nasdaq futures.
• Federal Reserve’s Beige Book: This report could provide valuable clues about the Fed’s economic outlook and policy stance, especially given recent market volatility and geopolitical tensions.
• Earnings Reports: Ongoing earnings releases from major companies will also shape market expectations and could lead to significant moves in stock futures.

Conclusion

Nasdaq 100 futures are at a critical juncture, facing substantial selling pressure after breaking key support levels. Technical indicators suggest a potential continuation of the downtrend, with critical support levels being tested. This week’s economic reports and the Fed’s Beige Book could provide the necessary direction. If the data surprises to the upside, it might trigger a reversal. Traders should remain vigilant and prepared for rapid market shifts.

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