Where we are: Nasdaq 100 futures currently trade at 27481.25, up 0.97% on the session, pushing towards the intraday high of 27621.00. This level is well above yesterday’s cash close of 24673.24, indicating a strong overnight bid. The technical picture suggests a potential test of the 27,500 level, with support around 27,200 holding so far.
What’s driving it: The rally is primarily fueled by renewed optimism surrounding AI earnings, with Alphabet and Amazon leading the charge after surpassing cloud computing revenue expectations and showcasing significant enterprise client wins for their AI technologies. Rising US breakeven inflation and a modestly long positioning in Nasdaq 100 futures, though not extreme, contribute to squeeze risk. While the FOMC statement from the prior session is still resonating, the immediate focus shifts to upcoming US data releases. The direction of travel will depend on how those figures alter the narrative around growth and inflation, and consequently, the Fed’s likely path.
- Amazon jumped over 3% pre-market.
- The 10Y breakeven inflation rate rose 2.0bp to 2.46%
- Net non-commercial Nasdaq 100 positioning stands at +9,439 contracts.
NY session focus: Traders will be laser-focused on the 08:30 ET release of Advance GDP, Core PCE, and the Employment Cost Index, all of which have the potential to significantly impact market sentiment. A stronger-than-expected GDP print above the 2.2% forecast could fuel further upside in the Nasdaq 100, targeting 27,700, while a weaker number could trigger a pullback towards 27,200. The trade that’s working is long tech on AI momentum. The trade at risk is short the Nasdaq, as positioning is already stretched to the long side and a data surprise could exacerbate the squeeze. The pain trade would be a hawkish surprise that sends yields sharply higher, sparking a rotation out of growth and into value.