This Week: NAS100 to move back to its record high?

• Megacap tech stocks dominated US indices gains
   
• Broader earnings recovery seen in recent months
   
• NASDAQ100 lags as cyclical companies attract buyers
   
• Prices above Fibonacci retracement at 19,989
   
• Key earnings reports due this week and next

Megacap tech stocks had dominated the US stock indices gains for some time, which fueled long-held concerns about an increasingly lop-sided rally.

But in recent months, we’ve seen a more broad-based earnings recovery and a Fed easing cycle kick off with a jumbo-sized rate cut.

That has seen the tech-laden Nasdaq lag the other US markets as cheaper, more cyclical companies have been snapped up by price-sensitive investors.
 

The Nasdaq hasn’t quite recovered all of its losses from the record high set in July.

Prices look to have moved decisively above a minor Fibonacci retracement level (78.6%) of the summer sell-off at 19,989.

• The 21-day simple moving average sits just above here at 20,093
   
• Last week’s top is 20,524, which resides just below the all-time peak at 20,795
   
• We get megacap tech stock earnings this week and next

Events Watchlist:
 

• Wednesday, October 23rd: Tesla Q3 Earnings

Tesla’s stock price will get a lift if it can beat analyst estimates, as it has fallen short of these for four straight quarters.

Sales guidance around its Cybertruck will be important, potentially building on its fast-selling start.

A boost from any China recovery should also bode well, as EV sales grew for the first time in months in the last quarter.

The Elon Musk owned company dropped over 12% after it unveiled its long-awaited robotaxi.

Tesla didn’t provide details on how fast it could ramp up production or deal with potential regulatory hurdles. Key levels of support are $205 on the downside and $240 above.

• Wednesday, October 23rd: Coca-Cola and T-Mobile US Q3 Earnings

Both, world’s leading beverage and US telecom company are slated to report their respective Q3 financial results this Wednesday.

Coca-Cola will release its report before the markets open, with investors hoping for the company’s revenue to reach $11.65 billion (-2.5% YoY) and EPS of 74 cents (71 cent in Q3 2023).

T-Mobile US will release its results after the closing bell on Wednesday. The market expect that the company will deliver a 6.19% increase (YoY) in revenue and 36.22% increase in EPS.

According to Bloomberg, the implied 1-day move for these stocks is currently at 2.23% and 3.28% respectively.

• Monday, October 23rd – Thursday, October 24: US Fed officials speak & US Fed Biege Book publicaiton

A number of US Fed officials will be giving commentary throughout this week including the CEO of the Minneapolis Fed Kashkari.

These commentaries may shed some light on the Fed’s stance regarding the US’ future interest rate policy.

Following the recent 50 bps cut, almost all Federal Reserve members have expressed their confidence that prices were on the sustainable path to the targeted 2% level.

At the time of writing the markets implied probability for a 25-bps cut during Fed’s next meeting was at 92.4% (83.6% – 1 week ago; source: CME FedWatch Tool).

Also, the Fed will publish its ‘Beige Book’ - an economic review published on the basis of reports of 12 regional reserve banks. This report will reflect data on the current state of industry, labour market, real estate and other areas of the US economy.

Here’s a comprehensive list of other key economic data and events due this week:
 

Monday, 21st October

• CN50: China loan prime rates
   
• TWN: Taiwan export orders
   
• USDInd: US Conference Board leading index, Fed Logan and Kashkari speeches
   

Tuesday, 22nd October

• NZD: New Zealand trade
   
• EU50: ECB President Christine Lagarde interview
   
• UK100: BOE Governor Andrew Bailey speech
   
• USDInd: Fed Schmid and Harker speeches
   

Wednesday, 23rd October

• CAD: BoC rate decision
   
• EU50: Eurozone consumer confidence, ECB President Lagarde speech
   
• SG20: Singapore CPI
   
• ZAR: South Africa CPI
   
• TWN: Taiwan industrial production
   
• US30: US existing home sales, Fed Beige book, Boeing earnings
   
• NAS100: Tesla, Coca-Cola and T-Mobile US earnings reports
   
• USDInd: Fed Barking speech
   
• US500: US Fed Biege Book
   

Thursday, 24th October

• EU50: Eurozone/Germany PMIs
   
• TWN: Taiwan jobless rate
   
• UK100: UK S&P Global Manufacturing and Services PMI, Barclays earnings
   
• RUS2000:  US jobless claims, S&P Global PMIs
   
• USDInd: Fed Hammack speech
   

Friday, 25th October  

• CAD: Canada retail sales
   
• EU50: Germany IFO business climate
   
• JP225: Japan Tokyo CPI
   
• SG20: Singapore industrial production, home prices
   
• US400: US durable goods, University of Michigan consumer sentiment