The Federal Reserve was front and center at 8:30 a.m. ET Wednesday. The Fed does not view the economy as a powerhouse at the moment and is prepared to be accommodative going forward. Investors cheered the move, as the once-hawkish Fed is in a more dovish stance. This sent stocks to new highs, something we finally saw in the Nasdaq today.
The index finished higher by 0.75%, outpacing the S&P 500 and Dow Jones, which gained 0.41% and 0.29%, respectively.
We’ve detailed why lower rates benefit tech stocks specifically and with today’s commentary from the Fed, we’re seeing it play out as a catalyst moving forward. The Nasdaq hit new all-time highs, as it sits near 8,200. Of course then, it’s no surprise that the PowerShares QQQ ETF (NASDAQ:QQQ) hit new highs as well.
The downside to today? The markets didn’t hold onto its morning gains, with a number of stocks backing off their initial rallies. While that doesn’t mean the market can’t go higher — in fact, it’s nice to see that the rally is being controlled — it did gnaw away at sentiment.
Trading the Nasdaq
Click to Enlarge
It would be very beneficial to see the Nasdaq hold the 8,100 level as support moving forward. Given that this is just over 1% away from current levels though, it’s not really a realistic request.
Bulls would love to see a rally over the next two to five days, before the index takes a break and consolidates. That’s when a slight pullback into the 8,100 level would be a great test. Of course, we get some of the largest names in tech reporting earnings in just a few weeks, along with an interest rate decision with the Fed.
So as “ideal” as investors would like the setup to be, it’s almost certain to be anything but. I’ll of course be watching the 8,100 level, as well as the 8,050 area that’s been buoying the Nasdaq all month. It’s possible that we see a gap-fill down to ~8,000, while the 20-day is sitting at 8,012.
Heard at the Nasdaq Today
Costco Wholesale (NASDAQ:COST) hit a new all-time high on Wednesday, as the retailer continues to grind out higher prices. Oppenheimer analysts named Costco stock a top pick and assigned a $295 price target to the name. After Wednesday’s rally, that target implies roughly 9% upside. Further, the analyst speculated about a potential special dividend in the range of $10 to $15 per share.
Speaking of top picks, Goldman Sachs analysts put Comcast (NASDAQ:CMCSA) on its conviction list. That came alongside an upgrade from neutral to buy and a significant bump in its price target from $44 to $54. The new target implies more than 23% upside.
News in the Nasdaq Today
McAfee is reportedly considering a $1 billion IPO and seeking a valuation up to $5 billion. The IPO market has been red hot — with exception to names like Lyft (NASDAQ:LYFT) and Uber (NASDAQ:UBER) — not to mention the Broadcom (NASDAQ:AVGO) M&A chatter to acquire Symantec (NASDAQ:SYMC) has to be motivating as well.
Intel (NASDAQ:INTC) and TPG both own McAfee.
In an interesting bit of news, Amazon (NASDAQ:AMZN) — which burst above $2,000 for the first time since Q4 2018 and surely gave a sentiment boost to tech investors — is reportedly teaming up its Alexa unit and the NHS to provide medical answers to users. Anyone who owns an Alexa device has to be happy with how it “learns” over time, although it’s drawn criticism over privacy in the past. Amazon promises to keep the data secure though, and not share it with third parties. Will users care?
Tesla (NASDAQ:TSLA) was in the news for several reasons earlier this week and found itself back in the news Wednesday. The company is reportedly gearing up its Fremont plant to increase its production. When the company reported a delivery result of 95,200 vehicles in the second quarter (well ahead of expectations), it was not accompanied by a reiteration of its full-year outlook for 360,000 to 400,000 vehicles.
According to reports, the company plans to produce significantly more than that for the full year. This sent shares higher by 3.85%, closing near $239.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long AMZN and AVGO.
