Nasdaq 100 Forecast: Can the Rally Hold Without Fresh Fuel?

• Nasdaq 100 forecast: Traders await fresh catalysts and eye August tariff risk.
• AI optimism and solid earnings from chipmakers have supported gains, but is momentum fading?
• Fed rate cut uncertainty rises on more stronger data (retail sales, Philly Fed, Jobless Claims), underpinning the dollar

 

The major US indices remain perched near record highs, but one can’t help feeling that markets are now waiting for the next big spark. The Nasdaq 100, in particular, has enjoyed an impressive climb since April, aided by a series of tailwinds: Trump’s decision to delay fresh tariffs, a welcome de-escalation in the Middle East, and the passage of a sweeping tax-and-spend package underpinning Trump’s second-term ambitions. Beneath it all, AI enthusiasm continues to bubble away nicely. Nvidia has powered to fresh highs, dragging a fleet of chipmakers and AI names in its wake. Taiwan Semiconductor’s robust Q2 showing was another shot in the arm, offering a boost to futures. But here’s the question on every trader’s mind: will we see further highs, or is this rally due a pause amid creeping inflation concerns and the looming August tariff threat? Indeed, today’s US macro data again topped expectations and up went further the dollar. Though good data is never a bad thing for stocks, it does raise questions markets about interest rates remaining elevated for longer. Still, the Nasdaq 100 forecast is not yet bearish at least from a technical standpoint, and needs a bearish catalyst to bring about some volatility.

 

Waiting for the Next Catalyst

 

Today’s release of stronger US data offered index futures some support, but is this enough to maintain the rally? Retail sales rose +0.6% vs. +0.1% eyed, Philly Fed index climbed to +15.9 vs. -1.2% and jobless claims fell to 221K vs. 233K expected.

 

With trade policy still uncertain and macro data mixed, it feels as though Wall Street is treading water. After reaching new highs, both the Nasdaq 100 and S&P 500 appear to be entering a holding pattern. European indices — from the DAX to the FTSE 100 — have shown similar hesitation despite recent highs. In short, sentiment remains upbeat, but sustained gains now require something new to grab hold of.

 

Could this earnings season do the trick? Or will the focus soon swing back to the ever-nearing August 1 tariff deadline?

 

Tariff Tensions: The Next Big Risk?

 

The true test lies ahead. August 1 is the new red line in the sand, and this time Trump has hinted there’ll be no more delays. Progress on trade talks has been underwhelming, and if history is anything to go by, another round of tariff hikes is far from unlikely. Such a development would be a spanner in the works for this extended rally. Since bottoming in April, US equities have enjoyed a remarkably smooth ride — but that could change fast if trade tensions return to the fore.

 

Federal Reserve: To Cut or Not To Cut?

 

Markets had a wobble after rumours surfaced about Powell’s job being on the line, only for Trump to quickly put them to rest yesterday. It was a reminder of just how fragile confidence in the Fed’s independence remains. Powell and the FOMC insist they’ll act on data — not political pressure — but the path forward isn’t clear-cut.

 

Concerns are growing that increased tariffs could feed into inflation, making a near-term rate cut a tricky proposition. While markets still expect the easing cycle to resume, bets on a September cut have pulled back somewhat after today’s release of firmer-than-expected retail sales and other data. Last week it the monthly jobs report that beat, while on the inflation front, we have some mixed numbers.

 

Meanwhile, the US dollar has resumed its upward march. Could that, in turn, take some wind out of equity sails?

 

Nasdaq 100 Forecast: Technical Levels and Trade Ideas

 

Source: TradingView.com

 

Technically speaking, the Nasdaq 100 forecast still leans bullish. Our US Tech 100 index, which is derived from the underlying Nasdaq 100 futures, has been on a tear since early April, breaking through many resistances, including more recently, its February peak and rarely looking back. While a pullback is always on the cards, especially given recent macro rumblings, bears will need a solid reversal signal before contemplating shorts. Until then, the dip-buying strategy remains very much in play.

 

Near-term support on Nasdaq 100 sits around 22,700 — a level that’s acted as both support and resistance on an intraday basis. Just below, the 22,500 area is noteworthy, aligning with the 21-day EMA. Should the index dip further, the old February high of 22,245 becomes the next level to monitor, followed by 21,875 — the last notable resistance before the recent breakout.

 

To the upside, 22,900 is of interest after Tuesday’s failed breakout and indecisive doji candle. The current all-time high sits at 23,046 — a level bulls will be eyeing keenly for a clean break.

 

-- Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R