Nasdaq Composite: Degradation of the technical profile with the war in Ukraine

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(News Bulletin 247) – The Russian army’s military offensive is causing risky assets to bend on the financial markets, with the notable exception of crude oil*. The Nasdaq Composite, which already lost 2.57% yesterday to 13,037 points, is expected to fall sharply, with an amplification effect compared to more general indices (DJI) or broader indices (S&P 500 for example). While refusing the term “occupation”, Russia bombs strategic and military targets, not only in the east of the country, but throughout Ukraine. Joe Biden announced a first battery of sanctions measures, targeting the banks and the elites in particular. He also announces that the development of the Nord Stream 2 gas pipeline will not be able to move forward.

The question now is to what extent and how the Ukraine crisis will invite itself to the Fed table, as a semi-annual hearing of J. Powell before the Senate approaches next week, and next month another meeting of the Monetary Policy Committee. The Fed’s intentions are still unclear. “We are monitoring the risk of overly aggressive tightening by the Fed, which could lead to a marked economic slowdown and a widening of credit spreads”, warns César Perez Ruiz, Head of Investments and CIO at Pictet Wealth Management. “Markets still don’t know what the Fed’s scheduled March meeting has in store. Few central bank officials have spoken in the past week, making expectations difficult. Governors appear to be evenly split between ‘hawks’ and “doves,” the minutes from their last monetary policy meeting showing that voting members remained sharply divided, both on the pace of interest rate hikes and on shrinking the Fed’s balance sheet.”

To be followed in priority, on the agenda this Thursday, the preliminary data of Q4 GDP in the United States at 2:30 p.m. and crude inventories across the Atlantic at 5:00 p.m.

*If the triggering of a war by the Kremlin causes the collapse of the equity markets, oil prices on the other hand soar on the back of fears over supply from Russia, the world’s second largest exporter of crude oil.

KEY GRAPHIC ELEMENTS

As a reminder, here are a number of key elements presented yesterday: “Congestion is expected between 13,330 points and 14,445 points, i.e. a wide band where operators’ nervousness can be expressed. In the event of an exit by the low, especially in thick volumes, the technical situation becomes problematic. As such, week 07 was a very high technical stake. The weekly closing level, of importance, is practically on the lows of the week.” In the light of the strength of the breach of this threshold, and in view of the opening in a very wide gap which is announced, the 13,330 points are tipped into major resistance. The technical conditions of the breakout are indeed eloquent: bearish engulfing coupled with a marubozu school black. The sales mobilization will have lasted the entire session.

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 13330.00 points.

CHART IN DAILY DATA

Nasdaq Composite: Degradation of the technical profile with the war in Ukraine (©ProRealTime.com)

©2022 News Bulletin 247

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