Nasdaq Composite: 30% decline since the start of the year

(News Bulletin 247) – The tone resolutely hawkish of the Fed (Federal Reserve) last week will have further fueled the downward trend in the Nasdaq Composite index which, due to its composition rich in growth stocks, is particularly sensitive to the monetary issue and to government bond yields. The Treasuries 10 years crossed 3.75%…

While it was close to 16,000 points at the very start of the year – it even surreptitiously exceeded them in 2021 – the flagship index of technology stocks on the American quotation is no longer just over 800 points from the highly symbolic bar of 10,000 points. It has fallen by more than 30% since the start of the year.

As a reminder on Wednesday, the Fed opted for the most widely anticipated scenario, namely that of an increase of 75 basis points, to bring the dollar’s rent to 3.25%. Two additional increases are expected by the end of the year. What penalized the market quite significantly, on the other hand, was the pessimistic nature of the revisions to the Fed’s economic forecasts, on unemployment, to 4.4% in 2023, on inflation (2025 only for the return to 2 %), and growth (almost zero this year, and 1.2% in 2023).

For Vincent Boy, “this position has disappointed the markets, which have so far anticipated a rate cut as early as next year. Indeed, despite the rapid deterioration of economic data in the United States, FOMC members see little risks of recession next year and continue to point to the strength of the job market.”

If this Monday is almost deserted on the macroeconomic side, the rest of the week will be dense and rich on this front with PCE prices (the Fed’s preferred measure) on Friday, and earlier, Thursday, the GDP for the second quarter, in final data.

KEY GRAPHIC ELEMENTS

On the graphic, technical and chartist side, the 11,460 points, put under surveillance, dropped, in conditions of volatility and volumes giving credence to the bearish message. A break in the chartist neck line is fully validated, giving the signal to enter a new working base, between 10,560 and 11,460 points. Very quickly the oscillations melted in the heart of this zone. In the immediate future, a short phase of rebalancing of the forces present is anticipated.

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 breakout of 10560.00 points would revive selling pressure.

CHART IN DAILY DATA

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