(News Bulletin 247) – Under pressure at the heart of next week’s approach to a new meeting of the Fed’s Monetary Policy Committee, the Nasdaq Composite index once again closed in the red yesterday, giving up closing 0.51% at 10,958 points. If a 50 basis point increase in Fed Funds is almost certain for the last FOMC of the year, it is the shape of the trajectory of the rates over 2023 (namely its degree of flattening) and especially the estimated value of the “terminal” rate which focuses the attention of the trading rooms. Immediately, the Treasuries 10-year, 10-year federal sovereign bond yields, are moving forward towards 3.50%.
For Erick Muller, Director of Products and Investment Strategy at Muzinich & Co, “the FOMC members’ projections (the DOTS) will send a clear message about the intentions to keep rates high for a long time, so as not to validating market expectations of a “pivot” which may seem premature for the Fed. This should result in a median projection up towards 5% for 2023 but also much more concentrated projections between 4% and 5% for 2024 than ‘last September, where the 2024 projections were very scattered.”
In terms of statistics, weekly registrations for unemployment benefits, for week 48, amounted to 230,000, in line with expectations, confirming a significant degree of tension on the job market. As a reminder last Friday, the publication of the NFP corroborated these tensions: if the unemployment rate stood at a stable level, at 3.7% of the active population, the number of job creations in the private sector (excluding agriculture) remained high, at 263,000 new units, well above target; and above all, the dynamics of wages (+0.6% on a monthly basis) showed no signs of easing.
KEY GRAPHIC ELEMENTS
On Thursday the Nasdaq Composite retraced higher the full extent of a consolidation flag between roughly 11,000 and 11,500 points, in strong volumes, with an open on session lows, and a close exactly on the high points. If this does not bode well for a final exit from the top, a little air has certainly been found. But the amplitude of a bypass flag has been clearly defined. It is within this flag that the oscillations will continue. An exit from below, not yet definitive, is possible.
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 11460.00 points.
CHART IN DAILY DATA
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