Nasdaq 100 Needs to Break Out Early This Week to Avoid a Top: Key Levels to Watch
Stocks finished the week higher following the Nvidia-led rally on Thursday.
However, the Nasdaq 100 failed to advance and clear key technical resistance. This could be important this week, especially if the index fails to surpass resistance early, as the risks turn unfavorable as we move through the week.
This week will feature important economic data, including the PCE report on Thursday, and Friday will feature the ISM manufacturing report and the University of Michigan consumer sentiment and inflation expectations.
We will get new home sales and S&P Caselogic housing prices early in the week, with GDP revisions on Wednesday.
It will be a week filled with Treasury auctions, with the 2-year auction on Monday at 11:30 AM ET and the 5-year auction later that day at 1 PM ET. Then, on Tuesday, we also get the 7-year Treasury action at 1 PM ET.
Last week, the 20-year and 30-year TIPS auctions were not strong, and both tailed.
The 20-year auction was particularly weak, with a bid-to-cover ratio down to 2.39% from 2.53% last month, while indirect acceptance rates plunged to 59.1% from 62.2%. That was the weakest indirect acceptance rate since June 2021.
The 5-year Treasury auction last month was fairly weak, with a low bid-to-cover ratio of 2.31% and a weak 60.9% indirect acceptance rate.
So this week’s 5-year auction will be something to watch when it takes place. If the numbers come in weaker than last month, that will be a sign of weak demand and could lead to higher rates.
We need to worry about yields at this point, mostly because of where they are on the charts.
The 7-year Treasury for example has been trading around resistance at 4.36%, since the CPI report, and has been respecting that level of resistance.
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