Nasdaq 100: Breakout Above 19,730 a Bullish Signal Ahead of Apple, Amazon Earnings
Fawad Razaqzada | Aug 01, 2024 13:59
- The Nasdaq 100's rally hinges on breaking key resistance around 19730 to confirm bullish momentum.
- A decisive move above this level would solidify the recent bullish signal ahead of Apple and Amazon earnings.
- Key support lies around 19320; falling below this could challenge the bullish case.
- Unlock AI-powered Stock Picks for Under $8/Month: Summer Sale Starts Now !
- Apple is anticipated to report earnings of $1.34 per share on revenue of $84.3 billion after the close. Investors will be closely watching iPhone sales, gross margins, and advancements in AI. While iPhone revenue is expected to dip due to increased competition in China, the services segment is forecasted to show strong performance.
- Amazon is expected to announce earnings of $1.01 per share on revenue of $148.54 billion. Analysts will be scrutinizing the growth in e-commerce, advertising, and AWS. Despite a recent dip, Amazon's stock has risen more than 20% this year, indicating a long-term positive trend.
- Meta Platforms (NASDAQ:META) surprised investors with stronger-than-expected second-quarter sales, thanks to its strategic investments in artificial intelligence, which are driving more targeted and personalized advertising. This positive development sent Meta's shares soaring in late trading on Wednesday.
- Arm (NASDAQ:ARM) faced a rough patch as its shares plummeted in late trading. The chip company decided not to raise its annual forecast, sparking concerns about its confidence in future growth. This decision led to an 8% decline in its stock during extended trading.
- Qualcomm (NASDAQ:QCOM) also faced turbulence. Despite a brief post-market rally on Wednesday, investor optimism waned due to worries about a sluggish recovery in the phone market, dampening hopes for a quicker rebound.
US index futures were little changed in the early European trade, shrugging off a less dovish than expected Federal Reserve policy decision, mixed tech earnings, and a big drop in Japanese stocks overnight amid the yen’s sharp rally.
All eyes will be on Nvidia (NASDAQ:NVDA) initially to see whether there will be any further upside follow-through after the big surge helped Nasdaq 100, before attention shifts to earnings results from two other tech giants: Apple (NASDAQ:AAPL) and Amazon (NASDAQ:AMZN).
The result of these companies could set the tone for the remainder of the week in what has been a mixed earnings season so far for the so-called “Magnificent 7” group of stocks. With high expectations, any further disappointment could derail the sizeable recovery we saw on Wednesday.
With markets pricing in the first rate cut in September, now would be the perfect time to position your portfolio for potential gains. This is where our cutting-edge AI-powered stock-picking tool ProPicks can prove a game-changer.
By deploying state-of-the-art fundamental data modeling, ProPicks identifies 90+ high-potential stocks every month before they take off.
That's how it has managed to bring an impressive 79.92% return since our official launch in November - which is a hefty beat on the still-healthy 30% return for the S&P 500 in the same period.
The next monthly rebalancing for August is right around the corner.
So what are you waiting for?
!
What now after Nvidia’s big rally?
A big feature of the tech-fuelled rally on Wednesday was Nvidia soaring in excessive of 12% following solid earnings from fellow chip stock Advanced Micro Devices (NASDAQ:AMD) the day before.
Nvidia, now the world's third-most-valuable company, saw its market value surge by a staggering $329 billion on the back of Wednesday’s sharp rally, more than making up a dramatic 7% drop that had erased over $193 billion the day before. All told, the company’s valuation is now an impressive $2.9 trillion.
Nvidia’s impressive gains come after a difficult last few weeks, with the stock breaking some key support areas like $117.00-$118.80, a technically-important zone that it still hasn’t reclaimed completely. Let’s see if the bulls will have the conviction to reclaim this broken support area now.
Get The App
Apple and Amazon set to report quarterly results
In terms of technology earnings, it is a big one this week. Already, we have seen results from a few of the magnificent 7 giants, delivering mixed results. Today, we will hear from Apple and Amazon. This will keep the tech-heavy Nasdaq 100 in a sharp focus, given we also have monthly US jobs report to look forward to on Friday.
As mentioned, tech companies have so far showcased a rollercoaster of performances. The latest ones to deliver their results included Meta Platforms, Arm, and Qualcomm:
Nasdaq 100 technical analysis and trade ideas
Interestingly, the chart of the Nasdaq looks quite similar to that of Nvidia. Both need to show some upside follow-through now to appease the bulls, else with the structure of higher highs and higher lows being dented somewhat, the bears may be lurking around for opportunities.
As the Nasdaq 100 futures chart shows, Wednesday’s rally comes right off the bullish trend line that has been in place since October. The recovery means the index has formed a bullish outside candle on the daily time frame, which wiped out the losses from the day before.
While this is a bullish signal, it comes on the back of a sharp drop lately which took out some key support levels including the area around 19730, which had been support in the past and where we also have the 21-day exponential moving average converging.
So, we will now need to see a decisive break above that area to confirm the bullish signal that was formed on Wednesday. Without follow-through the shape of any individual candlestick pattern should be taken with a pinch of salt.
Meanwhile, the key support area that now needs to hold comes in around 19320, making the high from Tuesday. A daily close back below this area would put the bulls in a spot of bother, especially if the index then goes on to break the bullish trend line.
***
This summer, get exclusive discounts on our subscriptions, including annual plans for less than $8 a month!
Tired of watching the big players rake in profits while you're left on the sidelines?
InvestingPro's revolutionary AI tool, ProPicks, puts the power of Wall Street's secret weapon - AI-powered stock selection - at YOUR fingertips!
Don't miss this limited-time offer.
Subscribe to InvestingPro today and take your investing game to the next level !
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.
Read my articles at City Index
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.