Nasdaq Composite: Hypersensitivity of the index to the monetary question

(News Bulletin 247) – Hypersensitive by nature to the monetary issue, and while long rates are quivering as a new verdict from the Fed approaches, the Nasdaq Composite, with a marked short-term downward bias, remains very volatile. After a session of great amplitude between the low points and the high points on Monday, it lost 2.28% on Tuesday to 13,539 points. See you at 8:00 p.m. (Paris time) for the actual monetary policy decision and at 8:30 p.m. for a high-risk press conference…

“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 March”, explains Thomas GIUDICI, Co -Head of bond management at AURIS Gestion.

On the microeconomic side, after Netflix which suffered painfully from the plaster last week, it is the turn of Microsoft and Texas Instruments to pass the examination of the quarterly reports (published yesterday after the market). The first beat expectations, driven by its cloud division, and the second published a clear growth in its net profit for Q4. Tesla will follow with Intel on Wednesday evening and Apple on Thursday, among other representative heavyweights, for a high-risk week…

In terms of statistics on Tuesday, the consumer confidence index (Conference Board) contracted less sharply than expected, even slightly exceeding its target, at 113.8 points. “Consumer confidence moderated in January, following gains in the last three months of 2021,” said Lynn Franco, senior director of economic indicators at The Conference Board. “The current situation component has improved, suggesting that the economy has entered the new year on solid footing. However, expectations for near-term growth prospects have weakened, indicating a likely moderation in the growth during the first quarter of 2022. Nonetheless, the respective proportions of consumers planning to buy homes, automobiles and major appliances over the next six months have all increased.”

The Treasuries 10 shortly before the opening of Wall Street retreated very slightly below 1.78.

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

In view of the key chart factors that we have identified, our opinion is neutral on the Nasdaq Composite index in the short term.

We will take care to note that a crossing of 13950.00 points would revive the tension in the purchase. While a break of 13330.00 points would relaunch the selling pressure.

CHART IN DAILY DATA

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