(News Bulletin 247) – The remoteness of a scenario of a sharp 50 basis point hike in federal rates as of the March deadline, combined with the apotheosis of Alphabet’s quarterly publications, gives a lot of air su Nasdaq Composite, expected sharply higher at the opening on Tuesday. Especially since – bad news is good news – the results of the ADP survey show a “destruction” of jobs in the non-agricultural private sector. Final verdict on Friday with federal NFP data (for No Farm Payrolls).
What brought some relief were remarks deemed rather reassuring from, in particular, the boss of the San Francisco branch of the Federal Reserve. What investors have been reading is that the “risk” of a 50bps hike is receding, and the likelihood of a 25bps hike is consolidating. Not enough to change the backdrop, the preferred work matrix, which remains a fairly tight monetary turnaround scenario for the year 2022.
While the FANGAM quarterly ball started badly with Netflix, it gradually took a much more positive turn last week, and it reached a high point with an almost doubling of the ex-Google’s annual profits. .. Very satisfactory copy also for AMD, which should suck up the whole of the highly strategic semiconductor sector.
On the statistical side, the ADP (Automatic Data Processing) survey shows a “destruction” of more than 300,000 jobs, where the financial community was rather expecting a soft landing, after almost 800,000 job creations in the sector. private sector (excluding agriculture) in December. In addition, very satisfactory signals to report yesterday on the side of the publications of the manufacturing ISM and new job offers.
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 underlying trend was broken, and after a pullback on January 12, the index started falling again on January 13, 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.
In the immediate future, it is the continuation of the rebound in protest that is on the program, with monitoring of volumes, which tend to decline. Highlighting such a discrepancy between prices and volumes naturally raises questions.
FORECAST
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 13330.00 points.
CHART IN DAILY DATA
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Source: Tradingsat
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