Nasdaq Composite: All Hazards Week

(News Bulletin 247) – Extreme volatility yesterday on Wall Street where the main equity indices experienced a vertiginous session, with cascading breaks from intermediate supports, before a rebound during the session to finish in extremis in the green. The index that interests us more particularly here, the Nasdaq Composite, the flagship index of technology stocks on the American side, managed to gain 0.63% at the close, at 13,855 points. At the lowest of the session, it was trading at 13,094 points, under the combined effect of geopolitical fears (Taiwan, Ukraine) and the prospect of further toughening of the Fed’s tone.

The Fed indeed completes a new meeting of the Monetary Policy Committee (FOMC) tomorrow. However, no hike in federal rates is expected, and barring any surprises, the start of the tap tightening will not occur until March. Verdict at the end of the meeting on Wednesday. The press conference will be dissected there in its least inflections of elements of language.

“The Fed will thus have to clarify its position on its desire, displayed during the last minutes of the FOMC in December, to reduce the size of its balance sheet. It will also have to try to give investors visibility on its rate hike schedule, the latter now anticipating 4 or even 5 increases in key rates for this year with, for the most pessimistic, a first increase of 0.5% (i.e. 2 rate increases at once) from the month of March”, explains Thomas GIUDICI, Co-head of bond management at AURIS Gestion.

In the microeconomic chapter, the tensions are obviously palpable after the Netflix “shock”… Microsoft and Texas Instruments will publish their annual copies after the market. Tesla will follow with Intel on Wednesday and Apple on Thursday, among other representative heavyweights, for a high-risk week…

To be monitored on the statistical side at 4:00 p.m. an indicator with a strong potential impact in the event of a deviation from the consensus, namely the consumer confidence index (Conference Board), expected to drop slightly to 111.40 points.

KEY GRAPHIC ELEMENTS

Let’s stop for a moment on the combination of candles validated on Thursday, firmly campaigning for a continuation of the ebb: a so-called three-cord black structure. The three black ravens are sometimes called “three-winged raven”, a term that comes from a Japanese expression saying that “bad news has wings”. This combination portends prices to fall if they appear at market highs or during an uptrend. Visually, the 3 crows are 3 black candlesticks, combining the following 2 characteristics:

1) All 3 candlesticks close at or near their lows.
2) Each open must be inside the body of the previous candle.

The structure is therefore fully validated and the thick and constant volumes on the three candles highlight its direction, in a market worried about the rise in long-term government bond yields.

In the end, over the whole of the past week, and on sustained cumulative volumes, the index will have closed on its session lows four times. In weekly data, this is the third time that it has closed on (or almost on) its weekly lows.

The oblique line symbolizing the trend background has been broken, and after pullback on January 12, the index fell again on the 13th, with investors mobilizing throughout the session.

PREVISION

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 13950.00 points.

CHART IN DAILY DATA

©2022 News Bulletin 247