(News Bulletin 247) – The Nasdaq Composite, the flagship index of technology stocks on the American side, ended last week on a red note, two macroeconomic indicators that may suggest the adoption of a slightly firmer tone on the part of the Fed: the producer price indexes and the consumer confidence index (U-Mich, preliminary data) both came out above their respective targets.
For the Federal Reserve, which ends the last FOMC of the year on Wednesday, it is this whole essential question of the shape of the curve of Fed Funds which will focus the markets’ attention for this last part of the year: more flattened, the progression could be slower, but what about the “terminal” rate?
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.”
“The Last Rise [des Fed Funds] of the year could slow to 50 bps, after four consecutive increases of 75 bps”, for the strategists of IVO Partners. “Despite this, economic indicators in the United States, such as the PMI indices or the unemployment claims, bear witness to a cyclical slowdown and confirm investors’ expectations of a recession in 2023. Uncertainty still hangs over the extent and duration of this recession, although the consensus seems to be tending towards a “moderate” recession.
No figures of major importance are on the agenda this Monday, and we will have to wait until tomorrow to have something to eat, with the consumer price indices (CPI) across the Atlantic.
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.
The 50-day moving average (in orange) converges towards this lower flag boundary.
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
©2022 News Bulletin 247
I have over 8 years of experience working in the news industry. I have worked as a reporter, editor, and now managing editor at 247 News Agency. I am responsible for the day-to-day operations of the news website and overseeing all of the content that is published. I also write a column for the website, covering mostly market news.
