Despite
good economic data like lower core inflation, stable jobless claims, lower
inflation expectations and strong consumer spending that support the
soft-landing narrative, the Nasdaq Composite just keeps on falling with very
shallow pullbacks. One of the main reasons might be the non-stop rally in long
term yields and real yields as it makes financial conditions tighter ultimately
weighing on the stock market. The good economic data might also be interpreted
as bad news because inflation might remain higher for longer requiring more
tightening from the Fed. There’s no easy answer at the moment, so the
technicals should be more helpful.
Nasdaq Composite Technical
Analysis – Daily Timeframe
Nasdaq Composite Daily
On the daily chart, we can see that the Nasdaq
Composite eventually broke the key trendline and it’s
now eyeing the 13174 support. That’s
where we can expect the buyers to step in with a defined risk below the support
and target the 14650 high again. The sellers, on the other hand, will want to
see another break to pile in even more and extend the selloff into the 12274
level.
Nasdaq Composite Technical
Analysis – 4 hour Timeframe
Nasdaq Composite 4 hour
On the 4 hour chart, we can see that the Nasdaq
Composite just keeps on breaching key levels as the bearish trend remains
strong with the moving averages crossed
to the downside and the price printing lower lows and lower highs. We are
likely to see the sellers step in again if we get a pullback.
Nasdaq Composite Technical
Analysis – 1 hour Timeframe
Nasdaq Composite 1 hour
On the 1 hour chart, we can see that we
have a divergence with
the MACD which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, we might see a pullback into the downward trendline
where the sellers are likely to pile in with a defined risk above the
trendline. The buyers, on the other hand, will need the price to break above
the trendline to switch to bias to the upside and start entering the market
with more conviction.
Upcoming
Events
The only top tier economic indicator left
is the US Jobless Claims report
scheduled for today. The market has been weak in the past days even in the face
of good data, so we might be at a point where bad data causes recessionary
fears and good data leads to higher rates expectations. It’s possible that the
market is more likely to react positively to data that it’s not too cold nor
too hot, so big deviations might be bearish either way.