(News Bulletin 247) – Is the eye of the storm in sight, namely a zone of calm between two crossings of intense turbulence? The future on the Nasdaq Composite index in any case suggests an opening in the green on Wednesday, against a background of naturally persistent nervousness, while the fighting rages in Ukraine. The Nasdaq Composite lost 1.59% to 13,532 points on Tuesday. The ebb since January 1, which has increased with the Russian invasion of Ukraine, now stands at 13.50%.
The question of the potential slowdown in global growth, in a high inflationary context, energy in the lead, completely reshuffles the cards for the big money-makers of the planet. “In this context, central banks should be more cautious and more accommodating, particularly in Europe, in the face of the risks weighing on growth. At the same time, inflation therefore appears to be less under control knowing that it could increase significantly case of an acceleration of sanctions on the energy front, again leading to the risk of a slowdown in activity”, explain Jean-Marie MERCADAL, Director of Investment Strategies and Eric BERTRAND, Deputy CEO and Chief Investment Officer at OFI AM.
And this even though the horizon is particularly foggy. “A stalemate and an aggravation of the conflict could lead to a phase of economic slowdown coupled with high inflation raising fears of a period of stagflation. Central banks are not finished being at the center of the markets”.
The Fed will end a new meeting of its Monetary Policy Committee (FOMC) on March 16. The odds of a 50bp hike have fallen sharply. The lift could be as little as 25 bps.
In terms of statistics, once again relegated to the background yesterday, the ISM manufacturing index rose to 58.6, beyond expectations. This Wednesday, the operators have just learned of the results of the survey by the private firm ADP on American employment in February. This “taste” before the results of the report No Farm Payrolls Friday shows job creations in the private sector (excluding agriculture) of around 475,000, well above the target.
KEY GRAPHIC ELEMENTS
As a reminder, here are a number of key elements presented last Wednesday: “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 At the bottom, especially in thick volumes, the technical situation becomes problematic. As such, week 07 was very technically challenging. The weekly closing level, which is important, is practically at the lows of the week.”
In the light of the strength of the breach of this threshold, the 13,330 points are swung into major resistance, even if the index came to end Thursday’s session above it. The technical conditions of the breakout are indeed eloquent: bearish engulfing lined with a school black marubozu. The sales mobilization will have lasted the entire session.
The buying mobilization throughout Thursday’s session is impressive and further validates the entry into a phase of high volatility. We remain negative below 13,330 points for the time being. After a short phase of rebalancing forces, where volumes will be put under close surveillance, the formation of a next bearish leg is envisaged.
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 14150.00 points would revive the tension in the purchase. While a break of 12640.00 points would relaunch the selling pressure.
CHART IN DAILY DATA
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