Fundamental
Overview
This week the growth fears
came back as the we got a couple of soft US data. Most of the weakness can be
attributed to the ISM Manufacturing PMI which disappointed as it missed
expectations, and the new orders index dropped further into contraction.
Overall, the report was
much better than the prior month, but it looks like the market wants to err on
the defensive side heading into the NFP report tomorrow. We also got the US Job Openings data yesterday, but it was July’s
data which was bad for many other indicators as it looks like short term
factors negatively affected the data.
We are going into the NFP
report with a 50/50 chance of either a 25 bps or 50 bps cut at the upcoming
meeting, so the data tomorrow will decide by how much the Fed is going to cut.
In today’s context though,
weaker labour market data and the prospect of a 50 bps cut might not be enough
to lift the stock market and could actually lead to more downside on
recessionary fears, so that’s something to keep in mind.
Nasdaq
Technical Analysis – Daily Timeframe
Nasdaq Daily
On the daily chart, we can
see that the Nasdaq eventually couldn’t break back above the 19728 level and
sold off into the 18900 level as the US data disappointed the market. The next support is near at 18737 level where we can expect the
buyers to step in with a defined risk below the level to position for a rally
into new highs. The sellers, on the other hand, will want to see the price
breaking lower to increase the bearish bets into the major trendline.
Nasdaq Technical
Analysis – 4 hour Timeframe
Nasdaq 4 hour
On the 4 hour chart, we can
see that the price got rejected from the swing low level at 19135. This is
going to be a key level the buyers will need to break to position for a rally
into the downward trendline around the 19500 level. The sellers, on the other
hand, will likely lean on the 19135 level to position for a break below the
18737 level.
Nasdaq Technical
Analysis – 1 hour Timeframe
Nasdaq 1 hour
On the 1 hour chart, we can
see the rangebound price action as we await the NFP release. Today we will also
get other labour market data but unless we get big surprises, it’s unlikely to
see a breakout today. The red lines define the average daily range for today.
Upcoming Catalysts
Today we have the US ADP, the US Jobless Claims and the US ISM Services PMI.
Tomorrow, we conclude the week with the US NFP report.