E-mini NASDAQ-100 Index (NQ) Futures Technical Analysis – Lower Yields Boosts High-Flying Growth Shares

September E-mini NASDAQ-100 Index future are trading more than 2.5% higher late in the session on Wednesday, bolstered by a government report showing a slower-than-expected rise in inflation in July.

The news drove down Treasury yields as the odds of a super-sized rate hike by the Federal Reserve in September dropped from about 70% to around 34%. Lower yields make capital-intensive technology stocks an attractive investment.

At 18:24 GMT, September E-mini NASDAQ-100 Index futures are trading 13359.50, +328.00 or +2.52%. The Invesco QQQ Trust ETF (QQQ) is at 325.01, up $7.93 or +2.50%.

US Consumer Inflation Unchanged in July

The Consumer Price Index (CPI) was unchanged last month after advancing 1.3% in June, the Labor Department said on Wednesday. Nonetheless underlying inflation pressures remain elevated as the Fed mulls whether to embrace another super-sized interest rate hike in September.

The so-called core CPI rose 0.3% in July after climbing 0.7% in June, but increased 5.9% in the 12 months through July, the same pace as in June.

Tech Stocks Advance as Yields Drop

High-growth and megacap technology stocks, whose valuations are vulnerable to rising bond yields, gained as Treasury yields fell sharply across the board. Apple Inc, Alphabet Inc and Amazon.com Inc rose more than 2% each.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 13419.25 will re-establish the uptrend. A move through the main top at 13582.75 will reaffirm the uptrend.

The minor trend is down. A trade through 13419.25 will change the minor trend to up. A move through 12963.25 will reaffirm the minor downtrend.

The intermediate range is 14327.50 to 11068.50. The market is currently trading on the strong side of its retracement zone at 13082.25 to 12698.00, making it support.

On the upside, the nearest resistance is a 50% level at 13812.00.

Short-Term Outlook

Trader reaction to the minor pivot at 13191.25 is likely to determine the direction of the September E-mini NASDAQ-100 Index into the close on Wednesday.

Bullish Scenario

A sustained move over 13191.25 will indicate the presence of buyers. The first target is the minor top at 13419.25. A trade through this level could trigger a late session rally into the main top at 13582.75.

Taking out 13582.75 will indicate the buying is getting stronger with 13812.00 the next target.

Bearish Scenario

A sustained move under 13191.25 will signal the presence of sellers. The first downside target is 13082.50, followed by the minor bottom at 12963.25.

Side Notes

The longer-term direction is likely to be determined by trader reaction to the retracement zone at 13082.50 to 12698.00. Currently, the index is trading on the bullish side of this zone.