(News Bulletin 247) – The ebb of Treasuries 10 years towards 1.80 should bring some respite to the flagship index of technology stocks of the American dimension, which yesterday lost 1.15% to 14 1340 bringing its decline to 8.34% since the beginning of the year. To continue to seduce, the test of quarterly (and therefore annual) results will be decisive. Among the heavyweights of the index, Netflix will open the ball this Thursday, after the stock market.
“Some Fed doves recently said they were surprised by the “high level and persistence of inflation”, in particular in connection with these global logistics tensions. Which ends up reinforcing the market’s conviction that the Fed will have to its monetary policy in a dynamic way”, retains Alexandre Baradez (IG France).
“It is therefore a much faster normalization of monetary policy than the previous one that will take place in the coming months. And the American markets have started to integrate this development since the beginning of the month with a rebound in rates and a decline in growth stocks and in particular technology stocks.
While the scenario of three episodes of federal rate hikes over the year 2022 seems certain, since the particularly firm tone of the last Minutes, report of the December FOMC, a scenario with 4 hikes is not excluded. The boss of JP Morgan expects the realization of this scenario: Jamie Dimon anticipates that inflation will remain well above the Fed’s 2% target in 2022 and therefore bets on more than 4 rate hikes from the central bank this year, which will lead to more volatility.
The stocks that are “paid” the most, namely mainly the solid records of American tech whose results are expected to increase in the long term, are in the front line when a stock market decline is brewing. This does not mean that the underlying bullish momentum is in jeopardy. But that the risks of correction are real, and that the amplitude of this correction must be assessed in the light of the initial advances…
This is broadly the general matrix of work for this beginning of the year. In the immediate term, however, and as soon as it opens, the Composite should regain some air, thanks to a few bargain purchases.
On the statistical side, weekly jobless claims for the week just missed expectations, at 286,000 new units, while the Philly Fed (Philadelphia Fed manufacturing index) rose to 23.2 points beating target.
KEY GRAPHIC ELEMENTS
The oblique line symbolizing the underlying trend was broken, and after a pullback on January 12, the index started to fall again, with investors mobilizing throughout the session. A serious gap is now brewing, confirming entry into a corrective phase. Without a quick reintegration of 15,000 points, a gradual slide towards 14,180, then 13,330 points, would be the working matrix for the next few weeks. Positive opinion across the upcoming session.
PREVISION
Considering the key chart factors we have mentioned, our opinion is positive on the Nasdaq Composite index in the short term.
This bullish scenario is valid as long as the Nasdaq Composite index quotes above the support at 14180.00 points.
CHART IN DAILY DATA
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Source: Tradingsat
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