The Nasdaq 100 is bouncing off

The Nasdaq 100 index has shown resilience, rebounding from recent lows amid volatile market conditions.

Investors closely monitor this index, comprising 100 of the largest non-financial companies listed on the Nasdaq Stock Market. Its movements are often influenced by tech sector performance, impacting broader market sentiment. The recent bounce indicates investor confidence in tech stocks' growth potential despite economic uncertainties. Analysts suggest monitoring key tech giants like Apple, Amazon, and Microsoft for insights into future Nasdaq 100 movements. Overall, the index's recovery reflects ongoing market dynamics and investor sentiment towards tech sector stability and growth prospects.

Regarding the Nasdaq 100, the index is currently rebounding from its 50-day Exponential Moving Average (EMA) after experiencing a notable decline last week. Despite the significant breach of bullish trend line support recently, the overall longer-term trend remains robust. Both the 50-day EMA and 200-day Simple Moving Average (SMA) continue to ascend steadily, indicating sustained strength in the index's performance.

After a recent decline to approximately 50% from July 12 to July 19, the percentage of Nasdaq 100 component stocks trading above their respective 20-day and 50-day moving averages has shown improvement. As of Monday, July 22, both indicators surpassed the 50% mark once more.

The Nasdaq 100 CFD is rising

A Nasdaq 100 CFD (Contract for Difference) is a financial derivative that allows traders to speculate on the price movements of the Nasdaq 100 index without owning the underlying assets. CFDs enable traders to take both long and short positions, aiming to profit from the price changes in the index. They are traded on margin, which means traders only need to deposit a fraction of the total trade value to open positions, thereby magnifying both potential profits and losses. CFDs are popular for their flexibility and the ability to trade indices, commodities, currencies, and stocks without owning them physically.

Over the past two weeks, the Nasdaq 100 CFD, which tracks Nasdaq 100 E-mini futures, has experienced a decline of 6.2% from its record intraday high of 20,792 on July 11 to a low of 19,501 on July 19.

During this period, it has lagged behind the value-oriented Dow Jones Industrial Average (+1.5%) and small-cap Russell 2000 (+4.7%), primarily due to the steepening of the US Treasury yield curve (10-year minus 2-year). From a technical analysis perspective, the Nasdaq 100 CFD appears to have reached a potential inflection point for a bullish reversal. This anticipation comes ahead of the earnings releases of Tesla and Alphabet after the US session's close on July 23.

The performance of Tesla and Alphabet is expected to heavily influence the Nasdaq 100 because both companies rank 7th and 8th respectively in terms of market capitalization among Nasdaq 100 component stocks. Their earnings outcomes could significantly impact market sentiment and potentially drive a turnaround in Nasdaq 100 CFD prices.

Factors that affect the Nasdaq 100 index

US elections

Reports indicate that Vice President Kamala Harris has secured Democratic nomination to run against Republican Donald Trump in the upcoming November elections. President Joe Biden endorsed Harris over the weekend after announcing he would not seek reelection. Harris faces a challenging task as Trump has widened his lead in the presidential race following his official nomination at the Republican National Convention last week.

With a relatively quiet economic calendar, focus now shifts to key earnings reports, including two highly anticipated releases. The tech sector experienced significant declines last week amid expectations related to a potential Donald Trump presidency and bets on Federal Reserve rate cuts, leading to a rotation into sectors that have underperformed throughout the year.

Tesla performance

Tesla is set to announce its Q2 earnings amidst a 25% rise in its share price for July. Analysts anticipate Q2 revenue to be $24.7 billion, a decline from the previous year, mirroring Tesla's year-over-year drop in deliveries to 444,000 units. Expectations also foresee a 40% decrease in earnings per share (EPS) to $0.46, reflecting pressure on margins. Tesla has faced challenges as it reduced vehicle prices multiple times, impacting its historically strong profit margins.

Alphabet earnings

Alphabet is scheduled to release its earnings report amid trading slightly below its all-time high. Analysts project earnings per share (EPS) of $1.85 on revenue of $84.29 billion. The company's stock has risen by 30% year-to-date, outpacing peers like Microsoft (MSFT) and Amazon (AMZN). Investors will closely monitor how Alphabet leverages generative AI advancements to drive growth. Additionally, attention will be on ad revenue trends and expectations for a robust performance in cloud services.

Interest rates and monetary policy

Changes in interest rates set by central banks, especially the Federal Reserve in the US, affect borrowing costs for companies and consumer spending. Lower rates can stimulate economic activity and benefit tech companies, potentially lifting the Nasdaq 100.

When considering shares, indices, forex (foreign exchange) and commodities for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss.

Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.