Nasdaq 100 Forecast:
- The Nasdaq 100, Dow Jones and S&P 500 appeared vulnerable on Tuesday as losses mounted
- Stellar earnings from Netflix may help to stem the bleeding, but many analysts expected a beat
- Nasdaq Trading Basics: How to Trade Nasdaq 100
Nasdaq 100 Forecast: Netflix Earnings Shatter Expectations
The Nasdaq 100 extended lower on Tuesday, compounding losses suffered earlier in the week alongside the Dow Jones and S&P 500. Continued turbulence in the crude oil market has helped to highlight the uncertainty that remains around the degree of economic activity that is to be expected in the coming weeks.
Together, the performance of the risk-sensitive assets may suggest sentiment is turning back in the favor of bears, even at a time when coronavirus cases look to be slowing. With that in mind, a stellar earnings report from Netflix will look to do its part in improving risk appetite in the week ahead, but will it be enough to stem the bleeding altogether?
Netflix Shatters Subscriber Expectations
As I noted in yesterday’s piece, market expectations ahead of Netflix’s quarterly report were lofty and the company rose to the top of many lists for possible outperformers while much of the developed world is in quarantine. Perhaps unsurprisingly, Netflix added more subscribers in the quarter than expected – a requirement among investors to be sure – but the addition of 15.8 million compared to the forecasted 7 million new plans seemingly exceeded investor expectations as NFLX shares rocketed higher in after-hours trading.
While the initial reaction was encouraging, a bullish follow-through will be required for analysts to confidently call the report a victory. Further still, broader risk aversion may hamstring the impact of the single-stock, rendering it as a mere bright spot among an otherwise struggling Nasdaq 100 which looks to be probing technical support.
Nasdaq 100 Price Chart: 4 – Hour Time Frame (February – April 2020)
If Netflix fails to revive broader risk appetite, an admittedly tall task to undertake singlehandedly, bears may look to drive the Nasdaq 100 beneath support and test subsequent levels around 8,200 and 8,010. Both areas have displayed some ability to influence price in the past and may provide early assistance for the tech-heavy index.
Either way, the strong quarterly findings came at a crucial time for the Nasdaq from a technical perspective while also confirming that the coronavirus-induced quarantine can lead to notable gains for some advantageously positioned corporations.
That being said, the Nasdaq 100, Dow Jones and S&P 500 will now shift their focus to upcoming reports from the likes of Intel on Thursday afternoon and Amazon on April 30 with a spattering in between. In the meantime, follow @PeterHanksFX on Twitter for updates and analysis as the Nasdaq looks to hold above technical support.
--Written by Peter Hanks, Junior Analyst for DailyFX.com
Contact and follow Peter on Twitter @PeterHanksFX
