Fundamental
Overview
The Nasdaq sold off pretty
aggressively on Friday following the weak US Flash Services PMI and later the Final UMich Consumer
Sentiment survey where the long-term inflation expectations jumped to a new 30-year high.
The bulk of the selloff
came after the jump in the long-term inflation expectations. The market might
be fearing that in case we get a slowdown, the Fed might not be fast enough in
cutting rates amid inflation remaining above target and uncomfortably high
long-term inflation expectations.
Of course, one single data
point might not be enough to get a bigger correction in the stock market,
especially since it’s from the University of Michigan survey and since we are
about to see a tick lower in the Core PCE Y/Y rate to 2.6% on Friday.
Nonetheless, this is
something to keep in mind in light of the next NFP and CPI reports coming out
before the March FOMC decision where we will also get the updated SEP and Dot
Plot.
Nasdaq
Technical Analysis – Daily Timeframe
Nasdaq Daily
On the daily chart, we can
see that the Nasdaq couldn’t extend the rally above the key 22111 resistance and eventually sold off
following the bad economic data. The sellers will likely continue to target the
20990 support, while the buyers will look for the price to rise back above the
key resistance to increase the bullish bets into new highs.
Nasdaq Technical
Analysis – 4 hour Timeframe
Nasdaq 4 hour
On the 4 hour chart, we can
see that the bearish momentum increased following the break of the upward trendline as the sellers piled in more
aggressively. From a risk management perspective, the buyers will have a better
risk to reward setup around the 21430 support to position for a rally into new
highs, while the sellers will look for a break lower to increase the bearish
bets into the 20990 level next.
Nasdaq Technical
Analysis – 1 hour Timeframe
Nasdaq 1 hour
On the 1 hour chart, we can
see that we have the most recent lower low around the 21955 level that could
act as resistance. If the price pulls back into it, we can expect the sellers
to step in with a defined risk above the level to position for a drop into the
21430 support. The buyers, on the other hand, will look for a break higher to
increase the bullish bets into new highs. The red lines define the average daily range for today.
Upcoming Catalysts
Tomorrow we have the US Consumer Confidence
report. On Thursday, we get the latest US Jobless Claims figures, while on
Friday we conclude the week with the US PCE data.