Nasdaq Composite: Midterms and inflation on the menu

(News Bulletin 247) – In the midst of digesting a FOMC that leaves room for multiple scenarios of the trajectory of Fed Funds, and with the approach of new inflation figures, the Nasdaq Composite (+0.85% yesterday to 10,564 points) is expected to rise slightly on Tuesday, in a near desert on the statistical agenda. Only the NFIB index of small American companies came to punctuate the screens of the trading rooms, without deviation from the consensus, while eyes turned to the results of the mid-term elections (the famous midterms).

“U.S. inflation data released this week will come under scrutiny, after the latest jobs data confirmed the continuing labor shortage. policy of extreme tightening”, note the strategists of the BlackRock Investment Institute, in the conclusions of their forum on the “new market regime”.

As a reminder on Friday, the federal monthly employment report showed chronic tensions, abounding in the direction of a continuation of a firm monetary policy. Only the slight increase in the unemployment rate, to 3.7% of the labor force, can be seen as a sign of the effectiveness of the Fed’s monetary tightening measures. For the other main indicators, the average hourly wage rose more than expected, at +0.4% monthly, and the number of job creations in the private sector (excluding agriculture) exceeded 260,000, beyond expectations as well.

Earlier in the week, after the FOMC, the Fed thwarted the hopes of the markets by once again adopting a firm tone. “No pivot in sight for the Fed, which is raising rates by 75 basis points (bps) and whose comments appear less accommodating than expected by the market. The Federal Reserve is concerned about the cost of a tightening that would be insufficient , while noting the importance of the impact delays. It signals a terminal rate close to 5%”, for Jeanne Asseraf-Bitton, head of research and strategy at BFT Investment Managers.

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 Monday’s harami is puzzling, especially since it was completed by a clear bullish encompassing, certainly without transcendent volumes. Volumes woke up on Wednesday, delivering a readable bearish message, complete with the index closing exactly at its session lows.

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 break of 10200.00 points would relaunch the selling pressure.

CHART IN DAILY DATA

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