(News Bulletin 247) – The Nasdaq Composite index, the flagship index of technology stocks on the American side, managed to grab 0.86% to 10,952 points yesterday, in falling volumes, as investors cling to the hope for a slowdown, at best a pause, in the Fed’s monetary tightening process (Federal Reserve). The next FOMC will be watched like milk on the fire, both on the decisions themselves and on the slightest inflection of language used in press conferences. The approach of the elections of midterms (08 November) also animates the trading rooms.
“Equities generally do well after midterm elections in the United States. Indeed, the latter often lead to a paralysis of Congress, effectively preventing any political changes that could scare the equity markets”, notes the statistical strategists. by BlackRock. “Such a scenario is unlikely to reoccur this time, however, due to the recession that the US Federal Reserve (Fed) rate hike cycle portends.” They point to an imminent recession, which will initially hit the sectors most sensitive to inflation and the monetary environment. Real estate is targeted: “As mortgage rates soar following the aggressive hikes led by the Fed, the number of new housing starts is plunging”.
Published on Tuesday, the S&P / Case Schiller real estate price index, which focuses on 20 representative American cities, corroborates the situation, coming out at 13.1% on an annual basis this month, against 16% last month, clearly missing expectations. We will closely monitor monthly new home sales tomorrow at 4:00 p.m.
To follow this Tuesday at 4:00 p.m. the Conference Board index of consumer confidence.
Alphabet and Microsoft will publish after market.
KEY GRAPHIC ELEMENTS
The gap of October 07 could not be fully filled at this stage, even though the opportunity was clear last week, proof that any attempt to regain control of the buying camp is fragile. The indecision doji candles on Wednesday 19 and Thursday 20 clearly illustrated this. A drift phase under this remaining gap is the preferred short-term scenario. The market bottom matrix remains bearish.
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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