LiveWire

The Nasdaq 100 had a bit of a tough week losing 1.2%, and facing wild swings. Nonetheless, considering the advance of the dollar and the ugly CPI report, the loss was relatively capped. What does this tell us? potentially the markets are moving on past, what could be a tough next 2 weeks. First, there are tech earnings, with Tesla, Netflix, Twitter,  IBM this week, followed by giants Apple, Microsoft, Amazon, Alphabet, next week. Then, next week will be the Fed meeting, where officials are expected to raise 75bps. Assuming earnings (and earnings guidance) are decent, without wild surprises like in Q1 with Facebook and Netflix, the picture could be positive for the Nasdaq. On the technical picture, the Nasdaq has resumed a short-term uptrend but is fast approaching resistance at ∼12'200. If it could close sharply above 12'260, it could be indicative of a more long-lasting rally, which could have some wind in the sails thanks to aggressive short positioning from traders, with many investors expecting downside and high levels of cash seating on the sidelines.  

Samsung reported better than expected revenue, signaling tech earnings may not be as bad as some feared about weakening demand and a rise in material costs. Investors are slowly shifting toward the view that the economic slow down may not be as painful as thoughts a few weeks earlier and there are increasing signs that inflation should ease in the medium term. As a result, stock investors are beginning to look past the pressure from higher yields, but the sentiment is still weak, despite improving recently. Looking at technicals for the Nasdaq 100, the tech-heavy indice in the US, it still needs to break free from its trading range, but recent action is encouraging for more upside ahead. 

Expectations around inflation and recession should continue to drive markets. While quarterly portfolio rebalancing could be helping stocks this week, more meaningful positive catalysts from lockdowns in China, Russia-Ukraine, and if Biden is able to convince the Saudis to increase oil output could bring further gains for stocks. On the flipside, unexpected shocks such Russia blocking gas exports to Europe (would hurt Russia just as much), or renewed spike in oil or inflation expectations could bring renewed pressure to stocks. In couple weeks, FANGs earnings will be key to offer further clues to tech investors about the earnings picture and outlook given the more challenging environment. In the meantime, the source of the selloff (inflation/central banks, commodities, lockdowns, war, supply-chain bottlenecks) should remain center stage. On a technical picture, around 4'000 is the next major resistance on the S&P500. 

Apple has told its suppliers to speed up iPhone development after China's Covid-19 lockdowns affected the schedule for at least one of the new phones. Shanghai remains largely paralyzed by a city-wide lockdown, which is now in its seventh week. The unverified report by Nikkei would confirm the lockdowns in China are creating many delays for corporate America, in addition to the surge in transportation and logistics costs. 

Snap sparked macro concern over the state of the economy, sending Nasdaq futures down more than 1.5%. Snap CEO Evan Spiegel said the social media app will miss its own targets for revenue and earnings in the current quarter and will look to manage expenses and slow hiring. Spiegel warned the macro environment is deteriorating further and faster than anticipated in last month's guidance. Snap shares plunged 30% in after-hours.