Nasdaq Leads Stocks Lower as Dollar Retreats Before Central Bank Bonanza

Friday’s sudden negative shift continued to define trading so far today, with the weakness in the Nasdaq and especially the market-leading tech giants is driving returns. The major US indices opened with losses, with the Dow and the S&P 500 clearly outperforming the tech benchmark, reversing the relationship that dominated the market for months.

Nasdaq 100 Futures, 4-Hour Chart Analysis

Facebook (FB), which quickly turned into huge drag following its disappointing guidance, is down by 4% today, Netflix (NFLX) is also under pressure, and the other FANG stocks, Google parent Alphabet (GOOG) and Amazon (AMZN), and Apple (AAPL) are also in the red, even as Apple is yet to publish its quarterly numbers, while Amazon and Google released decent reports. Should the momentum leaders of the recent US rally lose their mojo, the already fragile foundation of the rally will receive another hit.

FB, 4-Hour Chart Analysis

The largest public company, Apple is scheduled to release its earnings report tomorrow after the closing bell, and all eyes will be on the firm’s margins and its services segment. Apple is trying to deal with the fact that its main product, the iPhone is facing a maturing market with fierce competition, and its push to monetize its unparalleled ecosystem will be crucial to keep growing.

With the company’s record share in the largest indices, the earnings report will be huge for the whole market, and a positive guidance could stop the Nasdaq’s correction, while a disappointing report could trigger a deeper correction across the board.

Apple, Daily Chart Analysis

European and Asian stocks, which also lagged the market-leading US tech segment are also performing slightly better today, but from a longer-term perspective, they are still clearly on the weak side. The deep divergences that made us cautious in recent weeks are still present, and given the hostile valuation levels in the US and the Dollar-funding woes in emerging markets, we remain defensive regarding stocks here.

DAX Index, 4-Hour Chart Analysis

Central Banks in Focus as BOJ Intervenes

The Bank of Japan stepped in to prop up government bonds yet again overnight as the recent rumors of a possible policy change triggered a rise in yields that spooked the central bank. Monetary policy will be in the center of attention throughout the week and across the globe, with the Federal Reserve and Bank of England holding meeting s beside the BOJ scheduled gathering.

Dollar Index, 4-Hour Chart Analysis

The Dollar and the Yen were both sold compared to the other major today, with especially the Euro being pushed higher, despite the risk-off day in stocks. With the Dollar index still trading in a choppy range, hard-to-trade conditions will likely persist in forex markets in the coming eventful days, until a clear momentum move out of the pattern.

While the general picture in the most traded commodities is unchanged today, the weakness in the Dollar sparked a rebound-rally in crude oil and gold after Friday’s slump, while copper reversed its early losses too. The WTI crude contract is just above the key $70 per barrel level, gold is slightly over the $1230 level, while copper is holding on above the $2.75 level, for now.

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Trader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.