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Inside Markets — NDX and SPX


July 21, 2023

US equities are mostly higher after yesterday’s sell-off in mega-cap Tech took the Nasdaq 100 (NDX) down more than 2%, while the Dow Jones Industrial Average (DJIA) finished higher for a ninth straight session. Mega-cap Tech continues to struggle as NFLX and TSLA extend post-earnings declines, while investors book profits in Financials after underwhelming reports from AXP, CMA and RF.

It’s fairly quiet ahead of a catalyst-rich week ahead that includes three central bank decisions, new bank capital rules, peak volume of Q2 earnings season and key inflation data.

NDX: Yesterday’s -2.3% sell-off in the Nasdaq 100 was a 2 standard deviation move triggered by disappointing earnings and rising bond yields amid very crowded positioning. The weekend rebalance may also be a factor, but crowded positioning needs to unwind further before the index has an opportunity to outperform.

SPX: The S&P 500 decelerated near technical resistance at 4565 this week, but a lack of bearish momentum divergence suggests the move is likely consolidation rather than the start of a reversal. The first level of technical support sits at 4328, but the bullish trend remains intact as long as the index maintains levels north of 4275.

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