Nasdaq 100 pattern suggests rebound; what happened to Slack?

Nasdaq 100 pattern suggests rebound; what happened to Slack?

Equities 5 minutes to read
Peter Garnry

Chief Investment Strategist

Summary:  The three-week price action ending last Friday has happened before and if history is any guidance then the two-week future returns are positively skewed and significantly above the long-term drift in Nasdaq 100 futures. We also point out more soft indicators such as call option volume in Apple and Tesla suggesting risk appetite is intact although at a lower level compared against the previous weeks. We also look at Slack which saw its shares plunge 14% yesterday on disappointing billings although our view is that this phenomenon is only temporary.


The rebound in Nasdaq 100 futures is under way although there is a lot of wood to be chopped before getting back to the highs. Yesterday’s session saw a 4.2% move from intraday lows to the close in the future and today US technology stocks are nervously higher although not by much. As we alluded to earlier this week it would be interesting to observe the willingness to buy the dips and whether US retail investors would aggressively participate and especially in call options again after last week’s implosion of weekly call options. So far call option volume remains high across stocks such as Apple and Tesla but still down from the record levels in the weeks prior to the sell-off. It indicates that the rebound has some fuel.

Source: Bloomberg

Previous similar price action in Nasdaq 100 suggests rebound

Statistical analysis in financial markets is a fickle thing but when you observe a move like the past week it poses questions. We created 21 features on the Nasdaq 100 futures over a three-week running period ranging across price actions indicators. We then used a method called dynamic time warping to match the recent three-week price action period in the Nasdaq 100 futures with history going back to July 2000. In other words, we were looking for previous periods that were like this recent period from 14 August to 4 September (last Friday). We then isolated the 40 most similar periods and calculated their forward 2-week return.

The histogram below shows the distribution of those 2-week forward returns. It has a negative skewness, but the large negative return is the 2-week forward return from the 21 February 2020 starting point, so just ahead of the COVID-19 declines. If we remove this observation, which is arguably driven by a once-in-century event, the skewness becomes positive with an average 2-week forward return of 1.6% compared the historical average 2-week return of 0.3%. The technical price action setup thus suggests a rebound in Nasdaq 100 futures, but remember past performance is no indication of future performance. 
Source: Bloomberg and Saxo Group

Slack Technologies was down 14% yesterday on its earnings report despite revenue beating estimates and negative effects from the pandemic are slowly disappearing. The fiscal year guidance on revenue was also above the consensus estimate. However, Wall Street zoomed in on the Q2 billings that came in at $218mn against estimates of $233mn indicating a growth slowdown. Slack was one of the most anticipated IPOs of 2019 and has so far failed to live up to the hype with the stock down 32% since the IPO. Given the labour market indicators dynamics over the past couple of months we believe the billings will stage a comeback over the coming quarters surprising analysts.

Despite the negative sentiment due to the disappointing billings the quarter was still the best in the company’s history with cash flow from operations rising to $14.5mn and free cash flow hitting $10.8mn. The current trajectory indicates that the company will continue to grow revenue by around 30% per year. However, the competition is heating up with especially Microsoft going aggressively after Slack’s business.

Source: Saxo Group

Quarterly Outlook

01 /

  • Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    Quarterly Outlook

    Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    John J. Hardy

    Global Head of Macro Strategy

  • Equity Outlook: The ride just got rougher

    Quarterly Outlook

    Equity Outlook: The ride just got rougher

    Charu Chanana

    Chief Investment Strategist

  • China Outlook: The choice between retaliation or de-escalation

    Quarterly Outlook

    China Outlook: The choice between retaliation or de-escalation

    Charu Chanana

    Chief Investment Strategist

  • Commodity Outlook: A bumpy road ahead calls for diversification

    Quarterly Outlook

    Commodity Outlook: A bumpy road ahead calls for diversification

    Ole Hansen

    Head of Commodity Strategy

  • FX outlook: Tariffs drive USD strength, until...?

    Quarterly Outlook

    FX outlook: Tariffs drive USD strength, until...?

    John J. Hardy

    Global Head of Macro Strategy

  • Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Quarterly Outlook

    Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Althea Spinozzi

    Head of Fixed Income Strategy

  • Equity Outlook: Will lower rates lift all boats in equities?

    Quarterly Outlook

    Equity Outlook: Will lower rates lift all boats in equities?

    Peter Garnry

    Chief Investment Strategist

    After a period of historically high equity index concentration driven by the 'Magnificent Seven' sto...
  • Commodity Outlook: Gold and silver continue to shine bright

    Quarterly Outlook

    Commodity Outlook: Gold and silver continue to shine bright

    Ole Hansen

    Head of Commodity Strategy

  • Macro Outlook: The US rate cut cycle has begun

    Quarterly Outlook

    Macro Outlook: The US rate cut cycle has begun

    Peter Garnry

    Chief Investment Strategist

    The Fed started the US rate cut cycle in Q3 and in this macro outlook we will explore how the rate c...
  • FX Outlook: USD in limbo amid political and policy jitters

    Quarterly Outlook

    FX Outlook: USD in limbo amid political and policy jitters

    Charu Chanana

    Chief Investment Strategist

    As we enter the final quarter of 2024, currency markets are set for heightened turbulence due to US ...

Content disclaimer

None of the information provided on this website constitutes an offer, solicitation, or endorsement to buy or sell any financial instrument, nor is it financial, investment, or trading advice. Saxo Bank A/S and its entities within the Saxo Bank Group provide execution-only services, with all trades and investments based on self-directed decisions. Analysis, research, and educational content is for informational purposes only and should not be considered advice nor a recommendation.

Saxo’s content may reflect the personal views of the author, which are subject to change without notice. Mentions of specific financial products are for illustrative purposes only and may serve to clarify financial literacy topics. Content classified as investment research is marketing material and does not meet legal requirements for independent research.

Before making any investment decisions, you should assess your own financial situation, needs, and objectives, and consider seeking independent professional advice. Saxo does not guarantee the accuracy or completeness of any information provided and assumes no liability for any errors, omissions, losses, or damages resulting from the use of this information.

Please refer to our full disclaimer and notification on non-independent investment research for more details.
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-mena/legal/disclaimer/saxo-disclaimer)


Business Hills Park – Building 4,
4th Floor, office 401, Dubai Hills Estate, P.O. Box 33641, Dubai, UAE

Contact Saxo

Select region

UAE
UAE

All trading and investing comes with risk, including but not limited to the potential to lose your entire invested amount.

Information on our international website (as selected from the globe drop-down) can be accessed worldwide and relates to Saxo Bank A/S as the parent company of the Saxo Bank Group. Any mention of the Saxo Bank Group refers to the overall organisation, including subsidiaries and branches under Saxo Bank A/S. Client agreements are made with the relevant Saxo entity based on your country of residence and are governed by the applicable laws of that entity's jurisdiction.

Apple and the Apple logo are trademarks of Apple Inc., registered in the US and other countries. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.