(News Bulletin 247) – The Nasdaq Composite (-2.75% yesterday to 11,754 points), already destabilized yesterday by the resolutely offensive tone of Christine Lagarde, which clearly brings the ECB into a new cycle, is expected to fall sharply this Friday following the publication of figures on US inflation. On the broadest product base (food and energy included), prices increased monthly by 1%, against 0.7% expected, and 0.3% in April… What further consolidate the he idea of ​​a very firm monetary tightening, weighing on risky assets, and in particular on so-called growth stocks, of which the index which interests us here abounds.
At the end of May, inflation at an annualized rate (food and energy included) reached 8.6%. Excluding these volatile items from the base, the price increase reached 6%. Clearly, the “peak-inflation-already-behind-us” scenario is losing credibility… And the dread of the Fed – and investors – namely entering into a price-wage spiral n is not an option definitively ruled out.
To follow also the preliminary data of the consumer confidence index (U-Mich) at 4:00 p.m. This is a valuable indication for the Fed as well, in an economy where traditionally and structurally most of the creation of national wealth is produced by domestic consumption.
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 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 a high-stakes one on a technical level. In particular, we will monitor the weekly closing level in relation to the weekly lows. In any case, the very clear price/volume divergence has been unappealing since May 25. In addition, an exit from the bottom of a micro-diamond is validated.
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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