Where we are: Nasdaq futures are trading at 27979.00, up 0.79% and near the session high of 28003.50. This follows a mixed cash session yesterday and a weaker close, although futures have gapped up overnight. Resistance is clearly forming around the 28,000 level, which has so far capped gains, while support comes in around 27730.
What’s driving it: The near-term bounce in Nasdaq futures is being driven by a pullback in energy prices, providing some relief to inflation concerns. Despite a slight easing in the US 10Y yield to 4.422%, yesterday’s rise continues to cast a shadow, with inflation breakevens elevated. This rate environment, alongside strong earnings releases from key tech components, is creating a push-pull effect. The crowded short positioning in Nasdaq futures increases the risk of a squeeze on any positive data surprise. Furthermore, Intel’s potential Apple processor deal news adds to the positive sentiment, providing a catalyst beyond the broader macro picture.
- Net non-commercial positioning in the Nasdaq 100 is at the 0th percentile, indicating a crowded short and significant squeeze potential.
- 10Y Real Yields fell 3bps yesterday providing a tailwind to Gold, which could weigh on Nasdaq sentiment.
- Europe’s tech-heavy DAX is outperforming, up 1.31%, suggesting some spillover effect into US tech sentiment.
NY session focus: Today’s key event risk centers around the 10:00 ET releases of ISM Services PMI and JOLTS Job Openings, both high-impact releases that could dictate intraday direction. Watch for a break above 28,000, which could trigger further short covering, while a move below 27730 could see a retest of yesterday’s lows. The ISM service print matters here — the trade that’s working is shorting any rally above 28,000, anticipating that higher yields will eventually weigh on tech valuations. The pain trade for the Nasdaq 100 is a strong ISM print that pushes yields higher and simultaneously squeezes shorts.