Yesterday,
the US ISM Services PMI beat
expectations by a big margin and caused a selloff in the Nasdaq Composite. The
market pricing for future interest rates expectations turned a little bit more
hawkish with basically a 50/50 chance of another hike in November and less
rates cuts in 2024. Last week we got a “bad news is good news” type of
reaction, while yesterday it was the complete opposite as “good news was bad
news”. It looks like the market is still trading on interest rates
expectations.
Nasdaq Composite Technical
Analysis – Daily Timeframe
Nasdaq Composite Daily
On the daily chart, we can see that the Nasdaq
Composite tested the broken trendline and fell
into the previous resistance turned support where we
have also the confluence with the
red 21 moving average. We
should get a bounce here, but a lot will depend on the data going forward.
Nasdaq Composite Technical
Analysis – 4 hour Timeframe
Nasdaq Composite 4 hour
On the 4 hour chart, we can see more clearly the
strong support zone
where we can find many confluences. In fact, there’s the daily and the 4-hour
red 21 moving average and the 38.2% Fibonacci retracement level.
This is where the buyers should pile in with a defined risk below the support
to target another higher high. The sellers, on the other hand, will want to see
the price breaking lower to invalidate the bullish setup and position for a
selloff into the 13174 support.
Nasdaq Composite Technical
Analysis – 1 hour Timeframe
Nasdaq Composite 1 hour
On the 1 hour chart, we can see that we
had a divergence with
the MACD around
the trendline which is generally a sign of weakening momentum often followed by
pullbacks or reversals. In this case, we are still in the pullback territory,
but if the price continues lower and breaks through the support and the upward
trendline, then we will have a confirmation of a reversal and the sellers will
regain control.
Upcoming
Events
Today we will have the last important US economic
data for this week: the US Jobless Claims report. We saw just yesterday that
the market doesn’t like strong US data as that raises the chances that the Fed
might need to do more and eventually lead to a worse recession. So, if we get
good data, we should see more weakness in the Nasdaq Composite, while bad data
should provide a relief rally. At some point though, the market should start to
worry about bad data as well.