(News Bulletin 247) – The Nasdaq Composite index, whose Beta effect (amplification of variations) compared to the S&P 500 is currently glaring, gained 2.53% to 14,139 points yesterday, on cheap buybacks As Moscow announced a withdrawal of its troops massed on the Ukrainian border, NATO, for its part, refuses to speak of “de-escalation” and asks for proof of such a withdrawal. to constitute an important market driver, which can in particular influence inflation, operators will turn this Wednesday to American consumption, sacrosanct consumption which constitutes the main engine of the creation of national wealth across the Atlantic. all the more sensitive as the latest publications from the University of Michigan on the morale of the American consumer have shown a real weakness in this area.The score at 61.7 for this month, in preliminary data, constitutes a low point since s November 2011. It is for this reason that the operators are eager to know the real consumption figures. However, retail sales for the month of January jumped by 3.8% e, monthly rate, very largely beyond expectations…
The Nasdaq Composite index should, however, start the session in the red with the now increasingly credible scenario of a 50 bp hike in federal rates (Fed Funds) as of next month. “Soaring inflation nevertheless raises the risk of a 50bp hike in key Federal Reserve rates in March, amid widespread price pressures.” summarizes César Perez Ruiz, Head of Investments and CIO at Pictet Wealth Management.
“The temporary energy price increases and the repercussions on the supply chain are taking longer than expected to fade,” notes Bénédicte Kukla, Senior Investment Officer at Indosuez Wealth Management. “Looking ahead, labor market tightness in some sectors is putting upward pressure on average hourly earnings (up 5.7% year on year in January, the highest rate for 15 years) and increase the risk of long-lasting inflation.”
To follow the industrial federal report at 3:15 p.m. (volume of production and rate of use of production capacities).
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 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, 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 case of exit from below, especially in thick volumes, the technical situation becomes problematic. Week 07 is therefore very technically challenging.
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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