Nasdaq Composite: A little oxygen in the very short term

(News Bulletin 247) – New dropout yesterday on the Nasdaq Composite, which dropped 2.88% to 13,716 points, getting closer to an intermediate floor zone at 13,330 points, whose weakening is progressing. The level of risk appetite remains determined by the particularly tense geopolitical situation between Moscow and NATO, and by the prospect of a tightening of monetary policy by the Fed. The announcement of an imminent meeting between Antony Blinken and his Russian counterpart Sergei Lavrov should allow a momentary supply of oxygen.

Yesterday in the statistics chapter, targets missed for the two main statistical publications of the day: weekly unemployment benefit registrations for week 06, approaching 250,000 new registrations, and the Philadelphia Fed manufacturing index (Philly Fed index), down sharply to 16 points. To follow in priority, on the agenda this Friday, at 4:00 p.m., the consumer confidence index in the Euro Zone and sales of old homes in the United States.

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

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 14445.00 points would revive the tension in the purchase. While a break of 13330.00 points would relaunch the selling pressure.

CHART IN DAILY DATA

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