NASDAQ Resistance Looms as Earnings Season Unfolds

The US Dollar rose to a 3-week high ahead of this week’s significant employment data. The currency witnessed its most robust gains against the Japanese Yen, which has been declining against the whole market since last week’s Bank of Japan announcement. However, the worst-performing currency of this morning’s Asian session is the Australian Dollar due to the Reserve Bank of Australia’s decision to hold rates unchanged. 

On the other hand, stocks have been moving in a horizontal direction across the US and Europe. The NASDAQ has been the best-performing index of 2023, but the analysis below will confirm what is potentially required for the upward trend to continue. The only index that experienced bullish price movement on Monday was the Dow Jones, which has been positively earning within the banking sector. For example, this morning, HSBC confirmed their net profit doubled in the first half of 2023. The bank’s board of directors said they would proceed with a higher dividend of $0.10 and a buyback of $2 billion. As a result, demand for banking stocks rose across the board and supported the Dow Jones. 

However, it is essential to note that both the performance of the US Dollar and equities are likely to depend on this week’s employment data. The employment data includes the JOLTS Job Openings, Unemployment Claims, Unemployment Rate, Average Hourly Earnings and Non-Farm Payroll. Investors evaluate the data to determine if the monetary policy is causing a slowdown in the employment sector and if a recession is likely. For stocks, an ideal announcement would be a resilient employment sector but not strong enough to back further hikes. For the US Dollar, the higher the employment data, the higher the chances of a stronger currency. 

NASDAQ Resistance Level Looms

The NASDAQ is forming a resistance range between $15,803 and $15,665, where investors’ confidence to place further buy orders declines. However, this does not necessarily mean investors are placing large sell orders. The price this morning is declining during this morning’s futures market by 0.25%. European and US indices are lower this morning, with only the French CAC experiencing neither a decline nor an increase. This indicates an overall “neutral risk appetite”. 

NASDAQ 6-Hour Chart on August 1st

According to economists, investors require additional reasons to believe the index will imminent experience a further bullish trend. This will likely come from quarterly earnings reports and ideal data from the employment sector. Advanced Micro Devices will release their quarterly reports this evening after the market closes. Advanced Micro Devices stocks are experiencing significant price increases of 79% in 2023. This is due to the drive for AI and chipmakers. However, the company has seen lower earnings in the past four quarters. Analysts expect the company to confirm slightly lower earnings but the same revenue figure again. However, if the earnings and revenue are lower, investors may be discouraged by consecutive declines and lower figures, resulting in a selloff. 

Advanced Micro Devices is the 16th most influential stock within the NASDAQ and bears a weight of 1.47%. The NASDAQ will also be affected by Qualcomm's earrings tomorrow. However, the most significant reports will be on Thursday evening. On Thursday, after the market closes, Apple and Amazon will release their quarterly earnings reports. Apple is the most influential stock within the NASDAQ, and Amazon is the 3rd. The two stocks hold a weight of 16.71%. Analysts expect Apple to confirm lower earnings and revenue than the first quarter. However, analysts expect the company to release higher earnings per share and revenue with Amazon. However, the main price driver will be if the revenue and earnings are higher than expected. If both figures for both companies read higher than expected, both stocks and the NASDAQ potentially can rise further. 

Microsoft stocks, the second most influential stocks within the NASDAQ, are pressuring the NASDAQ. The stock has declined by 3.20% over the past week but has received positive news. The confrontation between the company and “antimonopoly” regulators over acquiring Activision Blizzard for $69.0B is nearing its end. According to reports, the US Federal Trade Commission will approve the deal if Microsoft continues to release Call of Duty games on the PlayStation platform from Sony Group for ten years. Investors now want to see if the news will support the stock price. 

Technical analysts are concentrating on the two breakout points, which can be used as a signal of a trend. However, analysts also state that a breakout would ideally be backed by fundamental elements such as earnings or employment data. Otherwise, traders run the risk of the price re-establishing itself within this week’s habitual range. Therefore, for the ideal bullish signal to form, investors will look for higher-than-expected earnings, employment data as previously expected, a breakout above $15,803 and no significant pending orders on the depth of the market. Fundamental analysts also advise that cheaper Dollar and commodity prices support the US stock market but to a lesser extent.

NASDAQ 1-Hour Chart on August 1st

Summary:

• The US Dollar rose to a 3-week high ahead of this week’s significant employment data.
• The stock declined during this morning’s Asian session ahead of significant earnings data. Analysts advise the market is currently witnessing a neutral risk appetite. 
• NASDAQ experiences a sideways trend, but investors focus on earnings and employment data — upcoming earnings reports; Advanced Micro Devices, Qualcomm, Apple and Amazon.
• For the ideal bullish signal to form, investors will look for higher-than-expected earnings, a breakout above $15,803 and no significant pending orders on the depth of the market.