Yesterday, the US CPI report
came basically in line with expectations as the market was already expecting
higher energy prices to push up the August inflation readings. The Core
measure, which is what the Fed is focused on, was in line with forecasts with
the monthly figure just a touch higher than expected. The core 3-month
annualised rate is now 2.4%, which is a good indicator for the Fed that their
policy is working well. Now, the question is whether the labour market softens
enough to bring inflation sustainably back to target without a recession. And
this is something that never happened in history.
Nasdaq Composite Technical Analysis
– Daily Timeframe
Nasdaq Composite Daily
On the daily chart, we can see that the Nasdaq
Composite is still consolidating around the support zone at
13810 with the red 21 moving average acting
as dynamic support. The bias is more skewed to the upside given that the price
has made a new higher high recently around the 14148 level and the moving
averages are crossed to the upside but watch out for a break lower as that
could open the door for a much bigger fall.
Nasdaq Composite Technical
Analysis – 4 hour Timeframe
Nasdaq Composite 4 hour
On the 4 hour chart, we can see that we got a break
below the upward minor trendline recently
and the moving averages on this timeframe crossed to the downside. This might
turn into a bearish flag pattern
and the likely target would be the 12274 support. The buyers will need a strong
bounce on this support zone to invalidate the bearish setup, while the sellers
will want to see the price continuing lower to confirm the breakout of the
pattern and pile in to position for the selloff.
Nasdaq Composite Technical
Analysis – 1 hour Timeframe
Nasdaq Composite 1 hour
On the 1 hour chart, we can see the tight
range the Nasdaq Composite has been trading in for the past week. The levels to
watch are the last higher high at 13934 and the last higher low at 13732. In
fact, a break to the upside should see more buyers piling in and extend the rally
into a new high. The sellers, on the other hand, will want to see the price
breaking below the 13732 low to make a new lower low and pile in to target the
13174 support.
Upcoming
Events
Today is likely to be a volatile one given that we
are going to see lots of top tier economic indicators released at the same
time. In order of importance, we will get the US Jobless Claims, Retail Sales
and PPI data. The September FOMC meeting is already a done deal as the market
is pricing a 97% probability of a pause, so the data is going to influence the
November and December expectations. Tomorrow, we conclude the week with the
University of Michigan Consumer Sentiment report.