Nasdaq Composite: A bit of fresh air

(News Bulletin 247) – Two elements militate in the immediate future for a rebalancing of the forces present, while keeping in mind that the market matrix remains bearish:

1 – The possibility of a 50 basis point hike in Fed Funds is still on the table, the Minutes published last night not formally ruling it out, even if the scenario of a further 75 basis point hike remains made possible. He held firmly the rope until then, given the rise in prices. As a reminder, following the last meeting of the Monetary Policy Committee, the Fed Funds were raised by 75 basis points, a scenario which had been (very partially) digested by the market. “A further 75bp tightening is even still possible in July given the dynamics of medium/long-term inflation expectations”, for Christophe MOREL, Groupama AM, who sees the cost of money at 3.50% at the end of the year.

For their part, [les stratégistes d’ECOFI] forecast[ient] that the Fed will hike rates by 75 basis points (bps) in July, 50 bps in September and 25 bps in November and December. We expect a Fed funds rate of 3.25% / 3.5%, close to the peak of the tightening cycle.” Based on the “three shocks [qui] strike the world: the war in Ukraine [qui] pushes Europe into recession; lockdowns in china [qui] result in a significant drop in activity; monetary and fiscal tightening in the United States [qui] beginning to weigh on the real estate market, even if prices remain high.

2 – Information from the Bloomberg agency that the Chinese Ministry of Finance is considering allowing local executives to sell 1.5 trillion yuan ($220 billion) special bonds this year, causing an unprecedented acceleration in infrastructure financing.

In terms of statistics, while the monthly trade balance (May) saw its deficit point to levels very close to the target, weekly claims for unemployment benefits are proving relatively disappointing, at 235,000 new units.

KEY GRAPHIC ELEMENTS

The flagship index of technology stocks of the American dimension is still in a downward phase, tracing a chartist pattern with an oblique neckline, within a corridor with a bearish bias. The pattern remains heavily bearish within the channel. The next highly psychological threshold is at 10,000 points. Immediate neutral opinion.

FORECAST

In view of the key chart factors that we have identified, our opinion is neutral on the Nasdaq Composite index in the short term.

We will take care to note that a crossing of 11460.00 points would revive the tension in the purchase. While a break of 10560.00 points would relaunch the selling pressure.

CHART IN DAILY DATA

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