(News Bulletin 247) – The Nasdaq Composite, the flagship index of technology stocks on the American side, lost a large part of its initial gains yesterday, and is preparing to open in negative territory on Tuesday, under pressure from the rise in stock market yields. US government bonds. The Treasuries 10 years, a real barometer, crossed the symbolic bar of 3% against a backdrop of persistent fears about inflation. Precisely, on this point, and while the question of whether the peak of inflation is past or coming, operators will have a benchmark on Friday with the various consumer price indices (CPI). Prices in the larger basket are expected to rise 0.7% in May, after 0.3% in April.
“While the upward trend in interest rates penalizes bond portfolios, the new inflationary environment is also unfavorable to equity markets,” notes David Letellier, Deputy Managing Director at Financière Arbevel. And even within this asset class, growth stocks, with high PER and which investors were ready to buy until now, whatever the cost, are in the front line. The index that interests us here is full of them.
“Inflationary pressures are ubiquitous and signs of slowing activity are growing. The current lockdowns in China and the war in Ukraine are keeping pressure on commodity prices and disruptions to global supply chains.” continues M Letellier.
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 traced 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.
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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