(News Bulletin 247) – operators are already planning for Thursday with the long-awaited publication of consumer prices (CPI), an essential “raw material” 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 market jolts, as it could imply an even faster tightening of US monetary policy, especially after last week’s NFPs came out sharply accelerating.” Boy.
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. This Wednesday, to follow as a priority, across the Atlantic, wholesaler stocks at 4:00 p.m. and crude stocks at 4:30 p.m.
On the stock side, and as the end of the quarterly prom of the major emblematic American tech groups looms, “the risk lies in their ability to maintain earnings growth and avoid their transition to a model similar to that of technology companies. utilities, where growth is stabilizing at a much lower level,” said César Perez Ruiz, Head of Investments and CIO at Pictet Wealth Management. “In this case, valuations tend to adjust downwards, which was the case for Meta, the parent company of Facebook, last week. We can now consider that the stocks of FAANG (Facebook, Apple, Amazon, Netflix and Google), which have dominated until now, are no longer an asset class in themselves, nor a homogeneous group. All of them have indeed broken records but experienced very different fates on the stock market after having returned their quarterly copy.
In the very short term, a slight decline in 10-year Treasuries will allow the index to open into green territory.
KEY GRAPHIC ELEMENTS
Let’s stop for a moment on the combination of candles validated on Thursday 01/20, 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 02/02 on confirmation of the price/volume divergence, immediately followed by a bearish gap, calls for the greatest caution.
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 7390.00 points would revive the tension in the purchase. While a break of 6884.00 points would relaunch the selling pressure.
CHART IN DAILY DATA
©2022 News Bulletin 247
I am currently a news writer for News Bulletin247 where I mostly cover sports news. I have always been interested in writing and it is something I am very passionate about. In my spare time, I enjoy reading and spending time with my family and friends.
