Nasdaq Composite: Minutes with high stakes, between NFP and IPC

(News Bulletin 247) – New drop suffered by the Nasdaq Composite yesterday (-1.04% to 10,542 points), in any trading volumes while the day was a holiday and a day off (not on Wall Street) for whole sections economy. The flagship index of technology stocks on the American side should find a precarious balance point on Tuesday, on a level of graphic support, while the publication, tomorrow, of the Minutes, traditional report of the last meeting of the Fed Monetary Policy Committee.

Minutes which will inevitably take on a particular color after the publication on Friday of particularly dynamic and solid American employment figures. “Once again, in this very unique period, “good news is bad news”, “clarifies Thomas Giudici, co-head of bond management at Auris Gestion, meaning that any good news on the health of the American economy is a further step towards pursuing a belligerent monetary policy.

“Although some leading indicators have weakened recently, the jobless rate and participation rate reflected a market that was too tight for the Fed to change its monetary policy, suggesting a 75bp hike at its next meeting,” he said. César Perez Ruiz, Head of Investments and CIO at Pictet Wealth Management.

As such, the consumer price indices published on Thursday will be a statistical hot spot this week. Just like the quarterly publication Thursday of the Taiwanese chip giant, TSCM, in an electric atmosphere after, as a reminder, the profit warning from AMC (Advanced Micro Devices Inc) which on Friday caused a shock wave throughout this driving sector for the index that interests us here.

As a reminder, the Fed’s number ONE priority remains the fight against inflation, of which the price/wage spiral would be the worst expression, even if it means putting a brake on economic activity. But precisely, “while the slowdown in economic activity is likely to lead to a contraction in earnings growth, the next earnings publication season will be decisive and should reflect a deterioration in margins” warns Vincent Manuel, Chief Investment Officer, Indosuez Wealth Management. “Confirmation of this hypothesis would lead to a further correction in equity markets.”

KEY GRAPHIC ELEMENTS

The small lateral transition that we foresee will have lasted three sessions, in volumes in free fall. A significant increase in this level of participation on the day’s falling session would give credence to the bearish scenario, even though the failure against a resistance zone (the 20-day moving average) is surgically observed. Beneath this short-term trend line, which is firmly under pressure, the opinion will remain negative on the flagship index of US listed technology stocks.

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 11250.00 points.

CHART IN DAILY DATA

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