Where we are: Nasdaq futures are currently trading at 30456.50, up 0.10% and near the top of the overnight range of 30362.75-30592.25. The cash Nasdaq 100 closed Friday at 26972.62, and the overnight action suggests continued upward momentum. We’re watching the 30600 level in futures as the next key resistance.
What’s driving it: Strength in tech continues to be the primary driver, amplified by positive sentiment surrounding AI and Nvidia’s latest announcements. With no fresh domestic data yet, the underlying bid is supported by the relatively stable US yield environment, with the 10-year at 4.452% and the 2-year at 4.037%. The slightly weaker dollar, with the DXY at 99.06, is providing a tailwind, but the dominant factor remains the AI-fueled enthusiasm for tech stocks.
- Powell’s scheduled speech later today, following his acceptance remarks from earlier, could offer further insight into the Fed’s outlook, although it’s unlikely to materially shift the current market narrative.
- The CFTC data reveals a crowded short positioning in the Nasdaq 100, with net non-commercial positions at -6,085 contracts, sitting in the 2nd percentile on a 52-week lookback. This leaves the index vulnerable to a squeeze if the rally continues.
- Asian markets showed strong performance overnight, with the Nikkei up 0.92%, providing additional momentum heading into the NY session.
NY session focus: Keep an eye on the 10:00 ET release of the ISM Manufacturing PMI and Prices Paid data; stronger-than-expected prints could temper the tech rally by reigniting inflation concerns. The key levels to watch are 30600 on the upside and 30360 on the downside. The current trade is long tech, but the risk lies in an unexpected hawkish turn from Powell or a surprisingly strong inflation print. The pain trade would be a sharp reversal in tech sentiment leading to a significant short squeeze in other sectors.