(News Bulletin 247) – A measurable nervousness in terms of volatility on the Nasdaq Composite index, ultra sensitive by nature to movements in Treasuries 10 years. Yesterday the flagship index of technology stocks, rich in growth records, regained 2.08% to 14,490 points. It is expected to fall sharply on Thursday, in the wake of US inflation figures.
The highly anticipated consumer price indices came out markedly higher, beyond expectations, raising fears of a faster and stronger tightening of the Fed. Excluding food and energy (elements considered volatile), prices rose monthly by 0.6% in December, against a consensus of +0.5%. Already in November, these prices rose by 0.6%. At an annualized rate, prices rose by 6%, unheard of since August 1982. Including energy and food, annual inflation is 7.5%.
What relaunch the scenario of a “double” increase in federal rates next month, namely a rise of 50 bps at once. At the risk of weighing heavily on growth records. Vincent Boy, market analyst at IG France, warned us earlier this week: “A higher-than-expected reading could lead to further shocks in the market, as it could imply an even faster tightening of US monetary policy, especially after the NFPs last week, which came out in strong acceleration.”
The 10-year-old Treasuries jumped in stride, flirting with the 2 (1.995).
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 trends The bottom line was broken, and after a pullback on January 12, the index fell 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. Congestion is expected between 13,330 points and 14,445 points, ie a wide band where operators’ nervousness can be expressed. In the event of an exit from below, the technical situation becomes problematic.
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 14445.00 points.
CHART IN DAILY DATA
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