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June E-mini NASDAQ-100 Index futures finished lower on Friday, wiping out the previous day’s gains as technology companies fell out of favor again due to the threat of aggressive rate hikes by the U.S. Federal Reserve. Traders also expressed concerns over a possible recession due to the Fed’s moves. The on-going war in Ukraine also weighed on sentiment.
On Friday, June E-mini NASDAQ-100 Index futures settled at 14327.00 down 209.00 or -1.46%. The Invesco QQQ Trust Series 1 ETF (QQQ) finished at $349.11, down $4.99 or -1.41%.
Shares of Tesla Inc, Nvidia Corp and Alphabet Inc fell between 1.9% and 4.5% as megacap stocks extended last week’s decline as the surge in Treasury yields weighed.
The 10-year rate hit a fresh 3-year high on Friday as investors continued to digest minutes from the previous Fed meeting.
The yield on the benchmark 10-year Treasury note traded above 2.7% on Friday, near its highest level since March 2019 as it continues its jump following recent comments from the Fed.
Meanwhile, expectations of an aggressive Fed tightening of monetary policy, along with rising inflation, has caused yields to invert. Investors have been selling out of shorter-dated Treasurys in favor of long-dated government debt, indicating concerns about the near-term health of the economy, with fears of a recession on the rise.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. A trade through 15198.00 will change the main trend to up. The nearest main bottom is 12942.50.
The minor trend is also down. A trade through 14642.25 will change the minor trend to up. This will shift the momentum.
The main range is 16700.00 to 12942.50. Its retracement zone at 14821.25 to 15264.75 is resistance. It is controlling the near-term direction of the index.
The short-term range is 12942.50 to 15268.75. Its retracement zone at 14105.50 to 13831.00 is the nearest downside target. Aggressive counter-trend buyers could come in on a test of this area. They will be trying to form a secondary higher bottom.
Short-Term Outlook
The direction of the June E-mini NASDAQ-100 Index early Monday is likely to be determined by trader reaction to 14476.50.
Bearish Scenario
A sustained move under 14476.25 will signal the presence of sellers. Taking out 14310.50 will indicate the selling pressure is getting stronger. This could lead to a quick test of 14105.50 to 13831.00.
Look for a technical bounce on the first test of 14105.50 to 13831.00. If it fails to hold, however, then look for an acceleration to the downside with 14242.50 the next major target.