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E-mini NASDAQ-100 Index (NQ) Futures Technical Analysis – Momentum Shifts Lower After Micron Warning

By:
James Hyerczyk
Updated: Aug 9, 2022, 20:07 UTC

The broad-based NASDAQ Composite was under pressure from the get-go on Tuesday after a bearish warning from Micron Technology.

E-mini NASDAQ-100 Index

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September E-mini NASDAQ-100 Index futures are trading sharply lower shortly after the mid-session on Tuesday as a bleak outlook from Micron Technology pressured chip and technology stocks.

General tension ahead of tomorrow’s key U.S. inflation report also encouraged nervous investors to take to the sidelines. Additionally, the fact that some of the major players were sitting on the sidelines ahead of the report may have helped fuel an exaggerated response to the Micron news.

At 18:00 GMT, September E-mini NASDAQ-100 Index futures are trading 13028.25, down 155.00 or -1.18%. The Invesco QQQ Trust ETF (QQQ) is at $317.04, down $3.67 or -1.14%.

Micron’s Warning of Weak Demand Rattles Chip Stocks

The broad-based NASDAQ Composite was under pressure from the get-go on Tuesday after a bearish warning from Micron Technology. The weakness in the chipmaker not only pressured the technology-weighted NASDAQ Composite, but also the PHLX Semiconductor Index and the technology sector of the benchmark S&P 500 Index.

Micron Technology cut its current-quarter revenue forecast on Tuesday and warned of negative free cash flow in the coming three months as customer inventories pile up amid waning demand for chips used in PCs and smartphones.

Micron, which last reported negative free cash flow in 2020 during the early days of the pandemic, warned it could see significant sequential declines in revenue and margins in its first quarter due to a fall in shipments.

Daily September E-mini NASDAQ-100 Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum shifted to the downside following the confirmation of yesterday’s closing price reversal top.

A trade through 13419.25 will negate the closing price reversal top and signal a resumption of the uptrend. The main trend will change to down on a trade through 12072.00.

The minor trend is down. It turned down earlier today when sellers took out 13085.00. This confirmed the shift in momentum.

The intermediate range is 14327.50 to 11068.50. The index is currently trading inside its retracement zone, making the Fibonacci level at 13082.50 resistance and the 50% level at 12698.00 support.

The short-term range is 11479.25 to 13419.25. Its retracement zone at 12449.25 to 12220.25 is potential support.

Daily Swing Chart Technical Forecast

Trader reaction to the intermediate Fibonacci level at 13082.50 is likely to determine the direction of the September E-mini NASDAQ-100 Index into the close on Tuesday.

Bearish Scenario

A sustained move under 13082.50 will indicate the presence of sellers. If this creates enough downside momentum then look for the selling to possibly extend into the minor bottom at 12814.75, followed by the intermediate 50% level at 12698.00.

Bullish Scenario

A sustained move over 13082.50 will signal the presence of buyers. The first upside target is a pivot at 13191.25. Overtaking this level could lead to a retest of the minor top at 13419.25.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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