(News Bulletin 247) – Against a backdrop of persistent fears of an acceleration of the US monetary tightening process, the main equity indices are expected to fall on Thursday, on the eve of the publication of new indicators on US inflation. Tomorrow will be published the various consumer price indices (CPI). In the widest product base, prices are expected to rise by 0.7% in May on a monthly basis, against +0.3% in April. An acceleration which, if necessary, would call into question the scenario of an inflation peak already behind us… In this context, the warming of Treasuries 10 years weighs on growth stocks, including the index that interests us here abounds.
The question, beyond monetary tightening as such, is that of the pace of this tightening: “Members prefer, broadly speaking, to accelerate the rise in these key rates in the short term in order to have the option, if possible, of to slow down later depending on the evolution of the economic context.” say Richelieu analysts in a recent note. “On this point, the explicit mention of the first signs of difficulties for certain companies in the face of rising prices, which have since been confirmed via a series of statistics, in particular in the real estate sector. slowing down could even go so far as not to go through the stage of a restrictive monetary policy.
Thomas Giudici, co-head of bond management AURIS Gestion, noted that “while rate hike expectations are now broadly in line with FOMC member rhetoric, investors, long accustomed to easy money, are still hoping secretly that monetary policy will be less restrictive than expected. Thus, as often, the markets then begin to watch for bad news on the American economy as so many good reasons to limit the enthusiasm for monetary tightening by the Fed.
However, on the question of the statistical calendar for the week, not only are the major indicators missing but in addition, the few figures present, such as the trade balance, have rather pleasantly surprised. It is therefore with nervousness that investors will focus on Friday on inflation figures in the sense of consumer price indices.
KEY GRAPHIC ELEMENTS
The thin trading range that we identified between 13,330 and 13,838 points was broken under conditions of volumes, volatility, and very significant candles. The marubozu plotted on Thursday 04/21 shows in particular a mobilization of the selling side throughout the session, until a close almost exactly on the low points, opening the way to a bearish target CT at 12,640 points. The latter was broken, after a very nervous hesitation in the second part of week 17. The warnings then came on and have not gone out definitively since. the harami envisaged on Monday has not been validated, and the relatively large candle, by its lower shadow, can serve as a framework for the start of a short-term bearish inflection. The reintegration of the lower part of the 20-day moving average (in dark blue), not yet relevant, would bring a clear bearish message. As such, the week is very challenging on a technical level. In any case, the very clear price/volume divergence has been unappealing since May 25.
FORECAST
Considering the key chart factors we have mentioned, our opinion is negative on the Nasdaq Composite index in the short term.
This bearish scenario is valid as long as the Nasdaq Composite index is trading below the resistance at 12140.00 points.
CHART IN DAILY DATA
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