(News Bulletin 247) – Catalyzed by a decline in yields on 10-year US Treasury bonds, the Nasdaq Composite continued its strong rebound in protest on Tuesday, gaining 3.41% to 14,239 points, without volumes increasing. . In the immediate future, what brought some relief were remarks deemed rather reassuring from the boss of the San Francisco branch of the Federal Reserve.
What investors have been reading is that the ‘risk’ of a 50 basis point hike is receding, and the probability of a 25 basis point hike consolidates. Not enough to change the backdrop, the preferred work matrix, which remains a fairly tight monetary turnaround scenario for the year 2022.
Since the beginning of the year, the decline in the flagship index of technology stocks on the American side has nevertheless flirted with 9%.
On the statistical side, we will closely monitor the manufacturing PMI (ISM data) and new job vacancies (JOLTS) at 4:00 p.m. Yesterday the Chicago PMI came out higher than expected, at 65.2.
The 10-year Treasuries, long-dated US government bond yields were worth around 1.78 heading into the opening of equity trading.
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 week 03, and on high 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 trends background has been broken, and after pullback on January 12, the index fell again on the 13th, with investors mobilizing throughout the session. Since then, the index has almost returned to levels where it had drawn a W on the slant last May. Breaking these levels would be problematic.
FORECAST
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 14445.00 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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Source: Tradingsat
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