Nasdaq 100: Triple Witching Caps Intel-Led Tech Stocks Rally

Intel Proved Thursday That One Deal Can Override the Fed

The Nasdaq Composite is up roughly 1.1% at the mid-session Thursday and the S&P 500 has gained 0.8%. The Dow is lagging at about 0.3% but it already hit a record this week and nobody is complaining about a rest day on the index that has done the most work. Intel surged nearly 10% after President Trump said Apple agreed to design and manufacture chips with the company in the United States. The Philadelphia Semiconductor Index hit a record high on the back of it.

One day after the Fed spooked the market with the most hawkish dot plot in years, a single corporate announcement rewired the entire session. That tells you something about where this market’s priorities are right now. Rate hikes are a problem. Intel landing Apple as a foundry customer is a bigger story and the tape said so before lunch.

Daily Nasdaq Composite Index (IXIC) Technical Analysis

The Nasdaq Composite Index is trading higher at the mid-session, but there has been much of a rally since the higher opening. Prices have stalled at about the mid-point of the week and the range is inside yesterday’s, which often indicates investor indecision and impending volatility.

The main range is 27190.21 to 24980.38. Its 50% to 61.8% retracement zone at 26085.30 to 26346.05 is the key area to focus on. This is because a potentially bearish secondary lower top has formed at 26788.62.

If buyers can sustain a rally over 26346.05 then they may take a run at 26788.62 to try to negate the secondary lower top.

If the 50% level at 26085.30 fails then the selling may get more intense with the 50-day moving average at 25549.66 the next major target and potential trigger point for an acceleration to the downside.

The Iran Deal Extension Changed the Oil Picture Again

The United States and Iran released the text of a signed interim agreement Thursday extending the ceasefire by 60 days while negotiations continue toward a permanent deal. Oil fell nearly 3% on the announcement and hit its lowest level since the conflict began. This is not a rumor or a framework anymore. Both sides released the actual text.

That matters for stocks because oil falling takes inflation pressure with it. Markets are now pricing roughly a 50% chance of a quarter-point rate hike in September, up sharply from about 27% just one day earlier. Normally that kind of move in rate expectations would crush equities. Instead the market bought through it. Lower energy costs are doing something that the Fed’s own policy has struggled to do on its own, and if crude keeps falling from here, the argument for additional tightening gets harder to make even for the most hawkish members of the committee.

I think that is the most underappreciated development of the session. The September hike probability doubled and stocks still rallied. The market is telling you it believes lower oil prices will do more to cool inflation than another 25 basis points from the Fed. Whether that turns out to be right is a different question, but that is where the money is positioned right now.

Tech Led but the Buying Was Broader Than Intel

Technology gained about 1.7% and Intel was the headline but the strength did not stop at chips. Micron and Marvell each climbed more than 5%. Nvidia added 1.1%. Industrials rose just over 1% on confidence in manufacturing demand. Utilities ran roughly 1.6%, one of the strongest prints among the defensive sectors, which is unusual on a day when growth is leading.

Consumer discretionary moved higher and that is the number I keep coming back to. If consumers are still spending with rate hike odds climbing and the Fed openly discussing tighter policy, the recession argument is not working. Communication services, real estate and materials all finished modestly positive.

Energy dropped more than 2% on the oil decline. Healthcare lost about 1%. Financials and consumer staples finished slightly lower. The losers were defensive and energy related. The winners were growth and cyclical. That is a risk-on session even with the Fed sitting on the market’s shoulder.

Accenture Warned and Took the IT Services Group Down With It

Accenture fell nearly 16% after lowering the upper end of its annual revenue forecast. That is not a small warning from a small company. Accenture is a bellwether for technology services spending across the enterprise and when it cuts guidance the market does not isolate the damage. Cognizant Technology Solutions dropped more than 8% and IBM lost more than 6% on the same concern. If corporate tech spending is slowing, the IT services names are going to feel it first and Thursday’s price action said the market believes the slowdown is real.

Kroger fell more than 6% after first-quarter earnings missed expectations with annual guidance left unchanged. A grocery retailer missing on profits in an environment where food prices have been elevated tells you margins are getting squeezed. The market is not giving companies credit for holding guidance anymore. It wants evidence that profits are expanding and Kroger did not deliver it.

Triple Witching Added Volume but Did Not Change the Story

Thursday’s session also included quarterly triple witching with stock options, index options and futures contracts all expiring simultaneously. That typically inflates volume and can create short-term volatility in both directions. The fact that the market held its gains through the expiration activity makes Thursday’s advance more meaningful than a typical up day. The buying absorbed the mechanical selling pressure from options expiration and kept going.

What to Watch

The Juneteenth holiday Friday shortens this trading week and leaves the market sitting on Thursday’s close through the weekend. The Nasdaq is holding above the 26085.30 to 26346.05 retracement zone and buyers need to sustain a rally above 26346.05 to take a run at negating the secondary lower top at 26788.62. A break below 26085.30 and the 50-day at 25549.66 becomes the target.

Intel landed Apple. The Iran ceasefire got extended with signed text. Oil hit its lowest level since the conflict started. September rate hike odds doubled and stocks still rallied. That is a market telling you it is more interested in what is going right than what the Fed might do wrong. Whether that confidence survives next week’s inflation data is the question nobody can answer heading into the long weekend.

More Information in our Economic Calendar.