As lockdowns continue to ease globally, the optimism from the market could spur US stock futures higher. Long NAS/USD on retracement?

US stock futures rose higher as the pandemic lockdowns begin to ease globally. Despite the racial strife and political upheaval, a rising stock market confounded many who do not understand the disconnect.

Traders seemed to have focused on the economic reopening and looked past the civil unrest in US stocks that would benefit from the economic restart. One of the main reasons could be the trading algorithms – that is driving the market – have no emotions and are forward-looking beyond the news.

The US is not new to protest and political upheaval which disconnects with the stock markets. For example, then-President Bill Clinton’s impeachment in 1998 and “Occupy Wall Street” protest in 2011.

However, with so much uncertainties comes the threat that things could go south pretty quickly. At least for now, what matters is whether there will be a 2nd wave of infection once the lockdowns ease fully.

We are slightly bullish on Nasdaq as the recent rise of the US stock futures was not attributed to the help of big tech. The market comeback over the past two months were led by the biggest tech and internet companies, and these companies underperformed on Tuesday.

Apple, Netflix, Microsoft and Alphabet all came under pressure on Tuesday, weighing on the Nasdaq Composite, which was down 0.3%.

The coronavirus outbreak has opened newer avenues of growth for tech companies which provides “work from home” peripherals like PCs, notebooks, accessories, cloud storage and etc. The usage of online and e-commerce services is also reaching new highs.

The long-term prospect of these companies looks promising as the pandemic has shown us that “working from home” could be a new norm in the near future, saving on rental spaces and other expenses.

Nasdaq (NAS/USD) is currently at a 9682 price level which is near to the 21st Feb high of 9753 which acts as a strong resistance. We are looking for a healthy retracement towards 9337 for an opportunity to long.



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Fullerton Markets Research Team

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