(News Bulletin 247) – Tuesday’s rebound (+2.51% to 11,069 points), the day after a non-working holiday (JuneTeenth) will have fizzled, and the flagship index of technology stocks on the American side is already expected to fall sharply on Wednesday, against a backdrop of recurring fears about inflation.
The markets remain stunned after the tightening, monetary or verbal, of the major central banks last week. “The hypothesis of witnessing a brutal tightening of American monetary policy weighed heavily on the equity markets”, summarizes BNPPAM in a market note. “At a time when they are emerging, more or less gradually, from the exceptional monetary policies put in place to fight the pandemic, central banks remain attentive to the reactions of investors. The fight against inflation has once again become the essential element of their function. of reaction, but there would be no point in provoking a new crisis.”
The President of the Federal Reserve of the United States should logically reiterate that the priority of the central bank is to break inflation – at the risk of precipitating a recession within a few months.
And this even as “households anticipate more and more lasting inflation”, as noted by analysts at Lazard Frères Gestion. As a reminder, the Fed raised its Fed Funds base by 75 points just a week ago. William Gerlach, Country Manager France at international payments player iBanFirst, notes that this is “the biggest increase since 1994”. “This reflects a sense of panic within the central bank as inflation creeps dangerously close to the symbolic 10% threshold (which should be reached within a few months, according to [iBanFirst]).”
Yesterday in terms of statistics, very little to eat, apart from sales of existing homes in the United States for the month of May, which came out almost perfectly in line with expectations, at 5,410,000 units. The agenda is denser tomorrow with a flurry of activity indicators (PMI IHS in flash data for June) and weekly registrations for unemployment benefits.
KEY GRAPHIC ELEMENTS
The working matrix remains unchanged, bearish in spite of the moreover timid reaction yesterday with regard to the initial ebb.
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 hesitantly nervous hesitation on the second part of week 17.
The warnings then came on and have not gone out permanently 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), validated, brings a clear bearish message.
Friday’s closing level off the weekly lows, which we put on watch, brings an additional bearish reading. The very clear price / volume divergence has been unappealing since May 25, was followed by a release of selling energy out of the bottom of a micro-diamond, followed by the formation of two large bearish gaps, the last of which was only partially regained on Wednesday 15.
A fragile oblique railing is put under very close surveillance.
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
©2022 News Bulletin 247
I am currently a news writer for News Bulletin247 where I mostly cover sports news. I have always been interested in writing and it is something I am very passionate about. In my spare time, I enjoy reading and spending time with my family and friends.
