Nasdaq Composite: Will J. Powell Whistle the End of Recess?

(News Bulletin 247) – The growth files, which display stratospheric valuation ratios, become hypersensitive with each anticipation of a toughening of the tone of the Fed. And while precisely, the institution headed by J. Powell, which will re-join for a new mandate, will complete the last FOMC of the year tomorrow, the tech sector is advancing stealthily on the stock market. Yesterday the Nasdaq Composite index lost 1.39% to 15,413 points, in higher trading volumes. It must be said that the installation over time of inflation does not plead for an endless pursuit of monetary “recreation” …

As a reminder published on Friday, in the broadest product base, prices increased more than expected in November (+ 0.8% monthly), against + 0.9% in September. In data corrected for volatile elements (food and energy), prices rose 0.5%, in line with expectations, according to the latest data from the US Bureau of Labor Statistics.

The Fed has already announced that it will no longer describe this price hike as “transient”, and observers now expect the institution to “announce a faster reduction” in asset buybacks in the markets, and “perhaps an allusion to the fact that the first key rate hike in the United States could come sooner than expected,” said Ipek Ozkardeskaya, analyst at Swissquote.

“The issue of the number of federal rate hikes is at the heart of the debate. [Les opérateurs ] “now foresee three rate hikes next year, while maintaining those anticipated for 2023. The possible change in the Fed’s monetary policy trajectory has triggered a sharp increase in market volatility”, for Mabrouk Chetouane, director Research and Strategy of BFT Investment Managers. However, this number of expected increases may change rapidly.

“The latest comments from Jerome Powell showed that the Fed could step up its tapering and advance the first rate hike in H1 2022.” for Vincent Boy. This pace, this anticipated trajectory of the tightening of monetary policy will constitute a powerful market driver for the end of the year on the index.

Especially since on the statistical side on Monday, a new inflationary marker has just been published with the producer price index in the United States, up 0.8% monthly for the largest basket, showing a warming higher than that predicted by the target (the market consensus).

To be followed tomorrow at 8:00 p.m. the outcome of the FOMC (Federal Open Market Committee) meeting with the verdict on the actual rates and the asset buyback program, and at 8:30 p.m. the institution’s press conference.

KEY GRAPHIC ELEMENTS

Regarding the substantive technical framework, at this stage unchanged:

Since October 28 and the registration of new historic highs after those of September 07, the flagship index of technological stocks of the American stock market has systematically closed on the high points of the session, in strong volumes, which contracted only very little . The buying side, fully mobilized, does not ask any questions. Short term:

The entry into a digestion phase, the structure of which will be instructive for the future, should be considered. We are still in the process of defining the framework, and the amplitude, of future consolidation. Wider consolidation is looming. A first bearish acceleration within this consolidation was expressed, Tuesday, and Wednesday, in a larger amplitude but less strong volumes.

Negative opinion on the scale of the only session to come. The ability to “hold” the 15,000 points will once again be essential this week. In the immediate future, the index is on the way to fill the bullish gap of December 07.

PREVISION

In view of the key graphical factors that 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 quotes below resistance at 16212.00 points.

DAILY DATA CHART

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