Nasdaq Composite: Feverish expectation of the next inflation publications

(News Bulletin 247) – The Nasdaq Composite (-0.58% to 14,015 points) is in a perilous position in the short term, while operators are already planning on Thursday with the highly anticipated publication of consumer prices (CPI), ” raw material” essential for the Fed in the construction of its monetary policy. “Things should get tough on Thursday with the publication of the consumer price indices (CPI) in the USA, which should once again show an acceleration in inflation,” warns Vincent Boy (IG Market).

“A higher-than-expected reading could lead to further jolts in the marketas this could imply an even faster tightening of US monetary policy, especially after last week’s NFPs came out sharply accelerating.”

As a reminder, the unemployment rate has – it is a surprise – slightly increased to 4% of the active population, but job creations have exploded expectations, whereas earlier in the week, the survey by the ADP firm show a negative balance. 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, and transportation and warehousing,” read the latest NFP report. .

In the immediate future, on the statistical side, there is little to eat on Tuesday. The NFIB Small Business Index barely strayed from target at 97.1. As for the monthly deficit of the US trade balance (December), it came out at -80.7 billion dollars, slightly beating the consensus.

KEY GRAPHIC ELEMENTS

Let’s pause for a moment on the candle combination validated on Thursday 01/20, firmly advocating for a continuation of the ebb: a so-called three black cord 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.

In the immediate future, the hanging candle drawn on Wednesday 02/02 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

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