Markets

Nasdaq Composite: Contrarian trades will prove fruitful

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(News Bulletin 247) – After a tombstone formation (26/10) which received confirmation on 27/10, it is now a structure in harami (yesterday) which has troubled the short-term graphic configuration of the Nasdaq Composite index (-1.03% yesterday at 10,988 points), which remains under pressure as the outcome approaches tomorrow, d another Fed monetary policy meeting.

The challenge, beyond a widely anticipated increase of 75 basis points in Fed Funds is to refine the “neutral” rate projections, ie the interest rate beyond which the Fed acts as a braking force preventing the economy from overheating. The Federal Reserve will be able to rely on the PCE indices published on Friday. Consumer prices according to this index (Personal Consumption Expenditures Price Index) increased by 6.2% over one year. Over October, prices rose 0.5%, within target. The Fed will naturally take into account, moreover, tensions on employment, while the monthly figures (NFP) are expected for Friday. Tomorrow, the survey of the private firm in HR ADP will give a valuable taste. This Tuesday, new job offers (JOLTS) will be scrutinized.

“At this stage, if the “dovish pivot” seems to be approaching, it is not yet certain! Indeed, despite the onset of recession, the signals militating for a continuation of the monetary tightening cycle have not yet dissipated and encourage us to remain cautious” warns Romane Balin, (Auris Gestion). Beware, therefore, “of a false start, in terms of a “dovish pivot””, and this, on both sides of the Atlantic…

“The Federal Reserve should once again raise rates “jumbo” (75 basis points) at its meeting ending November 2.”, anticipates, like many analysts, Thomas Costerg, Senior US Economist at Pictet Wealth Management. “Despite growing political pressures, including open letters from some Democratic senators fearing collateral damage to the economy, the Fed should stay ‘right in its boots’ given the persistence of inflation.”

To be monitored at 3:00 p.m., new job offers (JOLTS) and the ISM manufacturing activity barometer index at 3:00 p.m.

KEY GRAPHIC ELEMENTS

The flagship index of technology stocks of the American dimension traced, on the amplitude of the body of the candle of the day before, a candle in doji tombstone, which illustrates the breathlessness of the reaction started on 13/11. This candle was confirmed the next day by an elongated marubozu, a graphic illustration of the ongoing mobilization of the selling side. Friday’s session did not allow the weekly highs to be exceeded, and the harami from Monday is perplexing.

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 11250.00 points would revive the tension in the purchase. While a breakout of 10560.00 points would revive selling pressure.

CHART IN DAILY DATA

©2022 News Bulletin 247

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