Nasdaq Composite: Persistent tensions in the labor market

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(News Bulletin 247) – The vortex caused by the stock market setbacks of MetaPlatforms (ex-Facebook) has dragged down a galaxy of technology stocks, stamped Growth, on which questions about valuations have never been so strong. So certainly the quarterly copy, in its content, remains insolent in quality, but the social network, which has become Meta Platforms to “preempt” what promises to be the future of the Internet (the Metavers), has for the first time announced a decline in its number of active users, together with a disappointing forecast of its annual revenues. Result: a tumble of 26.39% to $237.76, the title returning to levels which had not been relevant since July 2020. The opportunity for the market to make frank decisions within the heavyweights tech, based on their ability to generate strong growth. Remember that Netflix, at the opening of the FANGAM quarterly ball, had suffered a similar fate.

The pressure is therefore strong on a whole section of the rating, hypersensitive by nature to the interest rate market and the tone adopted by the Fed. Fed, which closely monitors tensions in the job market. Just at 2:30 p.m., the statistical highlight of the week has just been published, the NFP report (for Non Farm Payrolls) on private employment in January (excluding agriculture). The unemployment rate has – it is a surprise – slightly increased to 4% of the active population, but job creations have exploded expectations, while earlier in the week, the ADP cabinet survey showed a balance negative. Such a gap between ADP and NFP is rare, even if the methodologies are different. The Bureau of Labor Statistics has therefore just published 467,000 job creations, literally exploding the consensus (110,000). “Job growth continued in leisure, events, business services, retail trade, and transportation and warehousing,” the latest report read. The interpretation of the pre-opening market is clear: that of increased pressure on wages, and therefore the confirmation of a monetary tightening scenario.

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, the hanging candle drawn on Wednesday on confirmation of the price / volume divergence, immediately followed by a bearish gap, invites selling.

FORECAST

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 14110.00 points.

CHART IN DAILY DATA

Nasdaq Composite: Ongoing tensions in the job market (©ProRealTime.com)

©2022 News Bulletin 247

Source: Tradingsat

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