NQ - First Positive Day in 2024
The Nasdaq 100 rose fractionally on Friday, January 5th, marking it as the first positive day in 2024. While many consider the first trading week as indicative of the year's narrative, it was a rough start for the tech index.
The Nasdaq 100 surged over 54% in 2023, fueled by the Magnificent 7. Specifically, the contribution ratio of the top 10 names in the Nasdaq 100 was 73%, meaning that 73% of the Nasdaq 100 return was driven by the top 10 names. This contribution ratio closely resembled the rally seen in 2020 and 2021, which is not surprising, despite the new secular trend of AI.
The Goldilocks Narrative and 2024 Challenges:
The Nasdaq will face major challenges in 2024, including an election year, geopolitical tensions, interest rates, and macroeconomic headwinds. Current macroeconomic headwinds pose risks as U.S. growth is expected to slow, prompting the treasury market to price in six interest rate cuts this year.
Recent labor market data has shown resilience for the most part. Wages, as reflected by average hourly earnings, grew more than expected at 4.1% YoY compared to the expected 3.9%. In December, the economy added 216,000 jobs, surpassing estimates of 170,000 jobs, and the unemployment rate further declined to 3.7% versus the expected 3.8%.
However, the release of non-manufacturing employment showed the worst decline since May of 2020. It seems that the equity markets are perceiving just enough labor market weakness to continue pricing in six interest rate cuts, priming the Nasdaq for its first fractionally positive trading day in 2024.
Check out CME Group real-time data plans available on TradingView here: tradingview.com/cme/
Disclaimers:
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs tradingview.com/cme/
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
The Nasdaq 100 surged over 54% in 2023, fueled by the Magnificent 7. Specifically, the contribution ratio of the top 10 names in the Nasdaq 100 was 73%, meaning that 73% of the Nasdaq 100 return was driven by the top 10 names. This contribution ratio closely resembled the rally seen in 2020 and 2021, which is not surprising, despite the new secular trend of AI.
The Goldilocks Narrative and 2024 Challenges:
The Nasdaq will face major challenges in 2024, including an election year, geopolitical tensions, interest rates, and macroeconomic headwinds. Current macroeconomic headwinds pose risks as U.S. growth is expected to slow, prompting the treasury market to price in six interest rate cuts this year.
Recent labor market data has shown resilience for the most part. Wages, as reflected by average hourly earnings, grew more than expected at 4.1% YoY compared to the expected 3.9%. In December, the economy added 216,000 jobs, surpassing estimates of 170,000 jobs, and the unemployment rate further declined to 3.7% versus the expected 3.8%.
However, the release of non-manufacturing employment showed the worst decline since May of 2020. It seems that the equity markets are perceiving just enough labor market weakness to continue pricing in six interest rate cuts, priming the Nasdaq for its first fractionally positive trading day in 2024.
Check out CME Group real-time data plans available on TradingView here: tradingview.com/cme/
Disclaimers:
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs tradingview.com/cme/
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
Disclaimer
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