Nasdaq Composite: Towards a weakening of an intermediate floor at 13,330 points

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(News Bulletin 247) – The slightly less aggressive tone than anticipated, in the “Minutes” published yesterday evening by the Fed, will have enabled the Nasdaq Composite (-0.11% to 12,124 points) to drastically limit its daily losses by ending the session far from its low points. The opening this Thursday is expected to continue in the red, due to missed targets for the two main statistical releases of the day: weekly jobless claims for week 06, approaching 250,000 new claims, and the manufacturing index of the Philadelphia Fed (index Philly Fed), down sharply to 16 points.

“Replies to the February manufacturing outlook survey suggest continued expansion in the region’s manufacturing sector. Indicators for current activity, new orders and shipments were all down from last month, but remained positive. Businesses also reported overall increases in employment and more widespread increases in prices paid and received. Future indices from the survey continue to suggest expected growth over the next six months. read in the comments under the post.

Yesterday, operators turned to American consumption on Wednesday, sacrosanct consumption which is the main driver of national wealth creation across the Atlantic. The subject is 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 regard. The score of 61.7 for this month, in preliminary data, is a low point since November 2011. It is for this reason that operators are eager to know the “real” consumption figures. However, retail sales for the month of January jumped 3.8% month-on-month, well above expectations… Moreover, the federal report on industry in January largely beat expectations, whether for the actual production dynamic (+1.4%) and the production capacity utilization rate (77.6%).

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. 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

Nasdaq Composite: Towards a weakening of an intermediate floor at 13,330 points (©ProRealTime.com)

©2022 News Bulletin 247

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