Nasdaq Composite: In perilous balance on a key technical area

(News Bulletin 247) – A transition session is looming between two movements dictated by fear, on the Nasdaq Composite, expected close to balance at the opening, while the Russian-Ukrainian conflict (or rather the invasion of the Ukraine by Russia) continues to weigh on operators’ morale, 9 days before the outcome of a new Fed Monetary Policy Committee. Especially since the labor market remains particularly tight, and inflationary tensions are obviously not relieved by the war on the borders of Europe. WTI was still trading at $125 a barrel a few hours ago…

“This dramatic conflict comes against a backdrop of bear markets marked by strong inflationary pressures resulting in several rate hikes in 2022.” for Thibault Prébay, Deputy Managing Director at Financière Arbevel “The last few weeks have also seen investors begin a sector rotation marked by the fall of certain categories of stocks (technological in particular) to the detriment of discounted stocks less sensitive to the foreseeable rise in If the current crisis will fuel the acceleration of inflation with the soaring prices of energy and agricultural raw materials exported by Russia (gas, oil, wheat, etc.), the major central banks (Fed and BCE) will be forced to adjust their plans.”

Mr Prebay sees “a 25 basis point rate hike from the Fed in March (and not 50 basis points as previously envisaged) now seems the central scenario, followed by 3 or 4 other hikes in 2022 in our opinion (and no longer 7 or 8 as some banks envisaged). This change of course by central banks could then benefit technology stocks as well as green stocks.”

In terms of statistics on Friday, the NFP (Non Farm Payrolls) report, the monthly federal employment report, highlighted the continuing tensions on the job market, which we mentioned in the preamble. With job creations much higher than expected (+678,000 in the non-agricultural private sector) as well as an even stronger contraction than expected in the unemployment rate, to 3.8% of the working population.

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 whole session.

The buying mobilization throughout Thursday’s session is impressive and further validates the entry into a phase of high volatility. However, 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 watch, the formation of a next bearish leg is envisaged. In the immediate future, after a short phase of perilous rebalancing, in divergent volumes, the scenario of a resumption of the decline below 13,330 takes place. Neutral opinion across the upcoming session.

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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