(News Bulletin 247) – The Nasdaq Composite (-1.51% to 10,575 points on Friday) ended exactly at its weekly lows, in a context that is still just as stormy, between fears of recession and aggressive monetary policy, the avowed aim of which is precisely… to slow down economic activity. Overheating prices were on the agenda precisely on Friday, with the Fed’s favorite measure, namely the PCE (Personal consumption expenditure price index). However, prices have once again exceeded the values expected on average by the economists and analysts surveyed.
Tensions on interest rates are bound to rise and – isn’t that the almost avowed goal? – weigh on growth. But to what extent? “This is a major unknown” for Jean-Marie MERCADAL, Deputy Managing Director in charge of management and Eric BERTRAND, Deputy Managing Director and Director of OFI AM Management. “There is currently a lag between the solidity of the labor markets, with rather low unemployment rates, and the rapid deterioration of the leading indicators of the economy. Several explanations can be put forward: companies have until now financial situations rather healthy, so much so that they do not lay off workers because of the subsequent difficulty in finding qualified labour.This shortage, which generates salary increases, is moreover one of the major concerns of fed.”
It is in this complex context – the bias remaining bearish but with possible very strong technical reactions – that the markets approach the wave of quarterly results. “Ahead of the earnings season, many investors are concerned about the impact of inflation on corporate margins and a potential slowdown in sales. Like corporate earnings, the midterm elections generate uncertainty”, warns Vincent Manuel, Chief Investment Officer, Indosuez Wealth Management.
To follow on the macroeconomic side, the PMI ISM industrial activity indicator, at 4:00 p.m.
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. A nervous phase translated by hatching in short tidy is the preferred option for future sessions. Volatility can therefore increase further, with the alternation of sharply rising and sharply falling sessions. A short range in time, but with a potentially large amplitude.
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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