Nasdaq 100 Rally Powers on Amidst Strong Earnings
2023.05.16 04:07
- A stronger-than-expected earnings season is supporting the risk-sensitive growth stocks that make up the Nasdaq 100.
- The index remains in a well-defined uptrend, with room for a continuation toward the 1-year highs near 13,700 in the coming days.
- At this point, only a reversal back below the 50-day EMA and previous-resistance-turned-support around 12,800 would erase the current bullish bias.
As we enter arguably the last major week of earnings season, there’s no denying it: US corporations have, by and large, performed better than most analysts were expecting.
According to the earnings mavens at FactSet, with 92% of S&P 500 companies’ results in the books, 78% have beaten earnings estimates, above the 10-year average of 73%, and 75% of companies have beaten analysts’ revenue estimates (vs. the 10-year average of 63%). These numbers are even more pronounced outside of the financial sector, which has been hit by tightening lending standards and a rising cost of capital amidst on the ongoing “bank walk.”
Source: FactSet
Put simply: Despite some signs of slowing macroeconomic growth, US corporations continue to outperform expectations, and that’s disproportionally supporting risk-sensitive growth stocks, like those that make up the .
Nasdaq 100 technical analysis – NDX Daily Chart
Against that fundamental backdrop, it’s not surprising that the just saw its highest weekly close since last summer. As the chart below shows, the index is in a well-defined uptrend, with any short-term dips consistently finding support between the rising 21-day and 50-day EMAs since the start of last year.
Source: Tradingview, StoneX
Between ongoing debt ceiling negotiations, Fedspeak, retail sales, and retailer earnings, there are still plenty of fundamental events to watch this week, but from a purely technical perspective, the path of least resistance for the Nasdaq 100 remains to the topside, with little in the way of major resistance until the 1-year high near 13,700. At this point, only a reversal back below the 50-day EMA and previous-resistance-turned-support around 12,800 would erase the current bullish bias.
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