(News Bulletin 247) – The Nasdaq Composite index (+1.28% to 10,475 points) on Friday is expected on a note of neutrality at the opening on Monday, on tiptoe before the results of the midterms (mid-term elections) and pending confirmation of an easing, in China, of the drastic measures against Covid-19.
On Friday, the monthly federal 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.
The main macroeconomic events of the week are consumer prices on Wednesday and the consumer confidence index (U-Mich) on Friday. The results of midterm elections will also be scrutinized. All the seats in the House of Representatives will be renewed and more than a third of those in the Senate. “According to the latest polls, the Republicans are the big favorites to regain the majority in the House of Representatives. The race is tighter in the Senate where the Democrats have a chance to maintain a narrow majority”, note the economists of Oddo BHF. “The loss of just one of the two chambers of Congress would be enough to rekindle the arguments between the two parties over the budget and the federal debt ceiling,” they warn.
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 a marubozu elongated, graphic illustration of a continuous mobilization of the sales camp. Friday’s session did not allow the weekly highs to be exceeded, and the harami of Monday is perplexing, especially since it was completed by a bullish engulfing, clear, 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
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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