Nasdaq Composite: J Powell becomes a little less dove

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Last week, the confirmation of PCE prices, the Fed’s favorite barometer, rising significantly, combined with Q1 growth data, the consumer confidence index and the manufacturing ISM beyond expectations, raised fears a slightly too significant heating up of the economy, at the very time when inflation was on the way to normalization. The reaction to government bond yields was not long in coming, with a surge in Treasuries 10 years at a level that had not been relevant since November.

Result: a clear opportunity for investors to take some profits on the values ​​of the index which have climbed the most in recent months, 7 Magnifiques in the lead. And this without, of course, calling into question the bullish nature of the basic configuration of the Nasdaq Composite index.

“During his speech on Friday, [J Powell] declared that “to have confidence” in the return of inflation to 2%, which would trigger the first rate cuts, he wanted to see more progress like that made last year, a way of saying that the figures of the recent months have been a little less satisfactory”, notes Alexandre Baradez (IG France).

“The president of the Fed on Friday thus appeared significantly more “centrist”, that is to say a little less accommodating than during his speech at a press conference at the last Fed meeting a few days ago. “

Neither dove nor hawk, therefore, for the months to come…

“The job market remains solid and not conducive to a significant moderation of wages. However, they have recently limited their progression, to around 4%. This variable remains fundamental in the eyes of the Federal Reserve which seeks to prevent a inflation through wages, more difficult to curb”, for Emmanuel Auboyneau, Managing Partner Amplegest.

In fact, we will have numerous benchmarks on the state of tensions in American private employment this week, culminating in the famous NFP (Non Farm Payrolls) report on Friday. If the unemployment rate is expected to be stable at 3.9% of the active population, the number of job creations is expected to fall sharply to 205,000. The monthly increase in hourly wages is expected at 0.3% in March , compared to 0.1% in February. This last figure will be studied closely…

KEY GRAPHIC ELEMENTS

After two dojis school on March 28 and April 1, a occasional breath of prices below the 20-day moving average (in dark blue) is expected at this stage of the ascent. A security barrier is ensured, right down to the 50-day moving average (in orange), the underlying trend curve which is currently hovering in the immediate vicinity of 16,000 points.

FORECAST

Based on the key chart factors we have mentioned, our view is negative on the Nasdaq Composite Index in the short term.

This bearish scenario is valid as long as the Nasdaq Composite index is below resistance at 17000.00 points.

DAILY DATA CHART