Fundamental Analysis Of Nasdaq 100 Futures

NinjaTrader
6 min readJun 13, 2024

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As one of the most active and volatile major market stock indexes, E-mini Nasdaq 100 Index futures offer traders the ability to speculate on some of the largest and most innovative technology companies listed on the Nasdaq stock exchange. This broad market exposure provides a simple, direct, and cost-effective way to trade price action and market trends with many added benefits over individual stocks and ETFs.

In this article, we’ll cover the key aspects that make up the fundamental analysis of the E-mini Nasdaq 100 Index futures and explore the dynamic factors that can influence and shape long- and short-term market price action. Understanding all the elements that can affect market sentiment and bias can help traders make better, more informed decisions.

  • What factors can drive the price of E-mini Nasdaq 100 Index futures?
  • What is the historical seasonal pattern of E-mini Nasdaq 100 Index futures?
  • What are the intermarket relationships with E-mini Nasdaq 100 Index futures?
  • Who are the big traders in the E-mini Nasdaq 100 Index futures market?

How Are E-Mini Nasdaq 100 Futures Used By Traders Around The World?

The E-mini Nasdaq 100 is a vital global trading instrument representing both domestic and international companies. By trading Nasdaq 100 futures, international traders can gain direct, efficient exposure to the technology sector’s performance without needing to invest directly in a large portfolio of stocks, which can come with foreign currency exchange risk.

What Can Affect The Price Of E-Mini Nasdaq 100 Index Futures?

Like most financial futures, economic indicators are important fundamental factors that can influence the price of E-mini Nasdaq 100 futures. Likewise, domestic and global economic health, geopolitical events, and the strength of the U.S. dollar (USD) can all impact trader sentiment. As these factors are often interconnected, it’s important to track economic reports and news in combination with your trading.

Economic Indicators

The daily flow of economic data often has a direct and immediate impact on market sentiment and can cause significant price fluctuations in the futures markets as traders position themselves for their short-term, midterm, and long-term investment outlooks. Key reports to follow include gross domestic product (GDP), inflation, the U.S. employment situation, and others.

USD

The USD plays a significant and sometimes complex role in the pricing of E-mini Nasdaq 100 futures. A strong USD can negatively affect the earnings of companies with substantial international operations; when the dollar is strong, revenues earned in foreign currencies are worth fewer dollars when converted back. Also, many commodities are priced in USD, making them more expensive, which can increase costs and reduce profits.

Geopolitical And Geoeconomic Factors

Negative geopolitical and geoeconomic factors can increase risk and affect investor sentiment, which can often drive the price of E-mini Nasdaq 100 futures lower. Things to look out for include energy supply disruptions, political instability, changes in trade policies, and international conflicts.

Join our daily livestream where we discuss these economic reports and factors with expert commentary and analysis.

How To Track Earnings Reports Using Nasdaq-Listed Companies

Tracking the earnings reports of large Nasdaq-listed companies is crucial for traders as these reports can significantly influence market sentiment and short-term price action. Earnings reports provide key insights into a company’s financial health, profitability, and future outlook, which can directly impact the stock price and the broader index if it’s a large component of that index.

For instance, if major companies like Apple or Amazon report strong earnings, it can boost investor confidence and drive market-wide rallies. Conversely, weaker than expected earnings from these giants can trigger selloffs. For active traders, staying aware of when earnings are released allows them to adjust their trading and positions proactively. Check out our blog every weekend for our weekly Futures Trading Outlook, which includes a list of expected reports.

Important E-Mini NQ 100 Intermarket Analysis Considerations

Intermarket relationships refer to the connections and correlations between different futures markets, and understanding these relationships can provide valuable insights for traders when formulating a directional bias for a specific market. For Nasdaq 100 E-mini futures, there are several key intermarket relationships to watch.

Bonds and Interest Rates: Typically, when bond prices rise (and interest rates fall), it can be positive for the stock market as lower interest rate yields make stock buying more appealing to investors. In addition, lower interest rates (borrowing costs) can help companies expand and boost corporate profits. Conversely, rising interest rates (falling bond prices) can make fixed income investments more attractive, creating less demand for stocks; and higher borrowing costs might depress corporate earnings due to lower consumer spending. The relationship between the 10-year Treasury yield and the Nasdaq 100 is something traders should always watch.

USD Index: The impact of a stronger USD on the Nasdaq 100, particularly due to the tech-heavy nature of the index, can be more negative than positive. Large technology companies often have significant international exposure, generating a large portion of their revenues outside the U.S. in a less competitive environment. In addition, when the USD strengthens, overseas income is worth less when converted back to USD, which can also hurt their earnings and, consequently, their stock prices.

Seasonality Patterns Of E-Mini Nasdaq 100 Index Futures

Seasonality is the analysis of historical price patterns throughout the year. The current E-mini Nasdaq 100 futures seasonality 15-year pattern (black line) has in recent years seen prices rise from the end of January through the end of April, then sideways prices through the end of June, a rally in July, lower prices in mid-August, then higher prices through the remainder of the year with a few minor pullbacks. (Figure 1)

It is important to note that seasonality is a general guideline for possible trends and not a measure of magnitude. Trends can vary significantly from year to year.

Figure 1: E-Mini Nasdaq 100 Futures Seasonality Patterns For 5, 15 (Black), And 30 (Purple) Years Of Historical Data.

What Affects The Intraday Price Of E-Mini Nasdaq 100 Futures?

The intraday price of E-mini Nasdaq 100 futures can fluctuate greatly based on news reports, trader sentiment, and the other fundamental factors we’ve discussed. But in today’s uniquely dynamic markets, it’s also important to consider the influence that technology has on stock market prices. Algorithmic and AI (artificial intelligence) trading is becoming a significant portion of trading volume, which can see many trades occur in a short period of time, moving the market and increasing volatility.

Using Technical Analysis To Trade On The E-Mini Nasdaq 100

In addition to fundamental analysis, most traders also utilize technical analysis to help determine entry and exit points. Technical indicators can be used on price charts to help analyze price trends and identify chart patterns and key trading levels.

There are several futures-centric indicators popular with traders, including Floor Trader Pivots, Commodity Channel Index (CCI), Ichimoku Cloud, VWAP, and NinjaTrader Order Flow Volume Profile. Indicators like moving averages and trendlines can help determine trend direction, while indicators like Stochastic and Bollinger Bands can measure momentum and help identify reversals in the trend.

Level Up Your Futures Trading With These E-Mini Nasdaq 100 Futures Analysis Skills

We’ve covered many concepts of fundamental analysis of the E-mini Nasdaq 100 Index futures market, which comes in both standard and micro-sized contracts. Every trader will have their own approach to market analysis, combining both fundamental and technical analysis along with risk management to form a trading plan to help them make more consistent trading decisions.

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This article was originally published on NinjaTrader.com: https://ninjatrader.com/futures/blogs/fundamental-analysis-of-nasdaq-100-futures/

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