(News Bulletin 247) – The rebound that began on May 25 on the Nasdaq Composite (-0.41% to 12,081 points) is already running out of steam, in a market that is struggling to be satisfied with the encouraging economic statistics published yesterday , beyond expectations in any case: the Chicago PMI index, the S&P Case Schiller real estate index and the sacrosanct consumer confidence index (Conference Board), which certainly came out lower, less strong than expected, but still down. same…
On this last indicator, Eric Lafrenière, US Equities Manager at Richelieu Gestion, has also made the following comments: “The figures suggest that inflation, in particular in categories such as food and energy, is weighing on the consumer confidence and impacting consumer budgets. This is forcing more Americans to dip into their savings and top up their credit cards to meet their expenses. Still, retail spending remains robust at the moment, even if consumer confidence has declined.”
Inflation is precisely the number ONE priority of the Fed, which must play the role of firefighter without drowning growth… “The fight against inflation is the absolute priority”, recalls Vincent Manuel, Indosuez Wealth Management. “One of the challenges, however, is to manage to slow inflation without plunging the economy into recession and recreating too much unemployment. The risk now would be that some central banks are expecting more inflation than will actually happen, having been in inflation denial throughout 2021.”
Tensions on the labor market are also leading indicators of inflation, and as such operators will carefully monitor tomorrow the ADP survey on private employment, weekly registrations for unemployment benefits and Friday the monthly federal report (NFP). The consensus is counting on 350,000 jobs created in the private sector across the Atlantic (excluding agriculture).
Let’s not forget, as César Perez Ruiz, head of investments and CIO at Pictet Wealth Management, reminds us that “Snap’s gloomy outlook for the American economy led to a plunge in technology stocks at the start of last week”. The Swiss bank’s management boutique reminds us that we remain “in markets which will remain volatile due to the dispersion of results”.
To be followed at 4:00 p.m. the industrial PMI (ISM).
KEY GRAPHIC ELEMENTS
The narrow 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 yesterday has not been validated, and the relatively large candle, by its lower shadow, can serve as a framework for the beginning 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.
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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