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Nasdaq 100 Support in Focus on Facebook Earnings Hitting Stock 20%

Nasdaq 100 Support in Focus on Facebook Earnings Hitting Stock 20%

Paul Robinson, Strategist

Facebook, Nasdaq 100 Highlights:

  • Facebook (FB) getting ripped for 20% on earnings last night
  • Hit Nasdaq 100 futures by over 100 handles
  • NDX support could be tested soon

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Facebook (FB) getting rippped for 20% on earnings last night

Facebook (FB) was clobbered yesterday just after the closing bell when they reported disappointing earnings, along with slowing in user statistics. Highlighting weaker than expected results was the CFO, David Wehner, saying that they expect revenue growth rates to decelerate by high single-digit percentages from prior quarters during the second-half.

If the stock wasn’t already priced for perfection heading into earnings, having run some 45% since the bottom in March, the carnage would have almost certainly been less. With Facebook accounting for about 6% of the Nasdaq 100, NQ futures sold off over 100 points following the release. This will have the cash index starting out today erasing all of yesterday's gains.

Facebook (FB) Daily Chart (Big gap lower)

Facebook (FB) daily chart, big gap down

NDX support could be tested soon

The Nasdaq 100 has been the clear leader among U.S. indices, having continued to notch new record levels since last month. If further selling on today’s gap-down picks up pace below the lower parallel from earlier this month, watch the area just around 7300 as it represents a peak from June (7310) along with the 7/17 gap-down day low (7288) and subsequent re-test on Friday (7301).

Shaking off today’s gap in relatively short order would be a sign the market wants to keep on keeping. If, however, selling picks up and the 7300-area cannot keep a bid in the NDX, look for pressure to continue down to the trend-line off the early April low.

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Nasdaq 100 Daily Chart (Support levels to watch)

Nasdaq 100 daily chart, support levels to watch

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---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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