Fundamental
Overview
The Nasdaq has been stuck
in a big range since the last FOMC decision as the market perceived it as more
hawkish than expected.
The Fed continues to place
a great deal on inflation progress to proceed with further rate cuts as
highlighted by Fed’s Waller this week. Therefore, the market is
waiting for more data to decide what the Fed is going to do next.
A soft CPI report next week
will likely trigger a strong dovish reaction in the markets, especially
considering the quick rise in Treasury yields in the last couple of months.
That should support the stock market and lead to more gains. Conversely, another
hot CPI isn’t going to help and could trigger another selloff.
Today, we have the US NFP
report and although the CPI is going to have a bigger influence on interest
rate expectations, it’s still going to be a market moving event, especially if
we get big deviations from the expected numbers.
Right now, the market would
want to see soft but not too soft data. A very bad or very hot report could add
more pressure on the market. Watch also wage growth, as Fed’s Bowman highlighted recently that it’s
still above the pace consistent with their inflation target.
Nasdaq
Technical Analysis – Daily Timeframe
Nasdaq Daily
On the daily chart, we can
see that the Nasdaq has been in consolidation mode since the last FOMC decision
with the 21000 level acting as a key support. From a risk management perspective, the buyers
will have a better risk to reward setup around the support to position for a
rally into new all-time highs. The sellers, on the other hand, will want to see
the price breaking lower to increase the bearish bets into new lows with the
20380 level as the first target.
Nasdaq Technical
Analysis – 4 hour Timeframe
Nasdaq 4 hour
On the 4 hour chart, we can
see that the price action has formed what looks like a descending
triangle. The price can break on either side of the pattern but follows
next is generally a strong move in the direction of the breakout, so the market
participants will wait for that to enter or add more to their positions.
Nasdaq Technical
Analysis – 1 hour Timeframe
Nasdaq 1 hour
On the 1 hour chart, we can
see that the price action has been compressing as we await the US NFP release.
If the price stays above the 21350 level, that would be more bullish and will
likely take us to the 21700 level. Conversely, if the price stays below the 21180
level, the sellers will likely push the price into the support and target a
break below it. The red lines define the average daily range for today.
Upcoming Catalysts
Today we conclude the week with the US NFP report.