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The S&P 500 had another rough day, dropping by 51 bps, while the Nasdaq 100 fell by more than 1%. Despite the decline, there were more stocks up than down, with 289 stocks in the S&P 500 up and just 211 down, but that lopsided market has been the case for months.

I think today would have been much worse had it not been for the better-than-expected GDP print. You could see it across the FX pairs in the yen; it looked like it was ready to break major support. The USDJPY hit support today at that 152 region, bounced right off it, and got a big boost from the GDP report at 8:30.

If GDP had missed estimates, dollar selling would have likely intensified, and the USDJPY would probably have blown through that support level at 152. Once through 152, there isn’t much stopping the USDJPY from falling through 150 and heading into the mid-140s. So, for now, at least, support is held, and we will see what tomorrow will bring.

After falling initially, the Nasdaq 100 futures bounced after the opening as the USDJPY pushed higher. However, it wasn’t enough to save the Nasdaq from a late-day sell-off.

It left the Nasdaq 100 pretty much just above a support level of around 18,650. So one could imagine that if the USDJPY should break that 152 level, the Nasdaq could potentially break that 18,650 level which opens a door to 17,540.

The absolutely insane thing is that the Nasdaq has fallen 9% since July 10, and would need to fall 25% more to get back to the October 2023 low.  That was 9 months ago? It isn’t like economic outlook dramatically improved, or like the Fed has even cut rates.

-or Nasdaq earnings estimates for 2024 have improved. Nasdaq earnings estimates for 2024 have risen a whole 2.7% since October. So if earnings aren’t improving and the market is rising it means that the entire gain for the Nasdaq 100 in 2024 has been on multiple expansion, a higher PE ratio. That is a lot of multiple expansions. But who knows, maybe the Nasdaq earnings estimates have formed a cup-and-handle pattern and are due to break out to the upside.

Once again the USDCAD testing resistance is at 1.385, for now, the 5 time. Maybe this time the drive for five will work out, and the USDCAD will bust through resistance and make a move for 1.40. I’m not sure, but the S&P 500 index has put in some big bottoms every time the USDCAD has gotten to 1.385 and then retreated.

Have a good one

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