(News Bulletin 247) – While V. Putin talks about progress, in the form of “positive developments” in the talks with Ukraine, the Nasdaq Composite (-0.95% yesterday to 13,129 points) is expected to rise this Friday. Volatility that is still just as intense therefore, in a short-term bias that remains bearish, the day after the publication of the latest inflation figures, which confirms the uncomfortable situation in which the Fed will have to manage the rise in rates. On March 16, it ends a new meeting of its Monetary Policy Committee (FOMC), after which a 25 bp increase in Fed Funds is expected.
The main meeting on Thursday concerned price dynamics in the United States. The consumer price index, excluding food and energy, rose by 0.5% month on month in February (+0.8% for the largest basket). Even if this figure comes out in line with economists’ expectations, they are now counting on a further acceleration of inflation in the second quarter in view of the soaring prices of raw materials in the context of the war in Ukraine.
While the Fed is faced with squaring the circle (“fighting runaway inflation without the economy experiencing a hard landing”), the Federal Reserve “has no other choice, it must intervene. “, for William Gerlach, Director France of iBanFirst “On the other hand, it will certainly try to intervene with caution, hence an increase of only 25 basis points.
J. Powell clearly brushed aside the option of a double hike (ie 50 bps at once) on March 16, when he raised the issue last week, in a semi-annual hearing before Parliamentarians.
“Too much uncertainty remains about the war in Ukraine. In addition, US consumer confidence has fallen sharply. The last two times it was so low and the central bank started a cycle of monetary tightening, it led systematically into a recession. That was in the 70s and early 80s.”
To follow on the statistical side this Friday precisely, the consumer confidence index (U-Mich) in preliminary data at 4:00 p.m. The indicator produced by the University of Michigan is expected to contract to 61.4.
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 the session on Thursday 02/24 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. Positive opinion on the scale of the only session to come.
FORECAST
Considering the key chart factors we have mentioned, our opinion is positive on the Nasdaq Composite index in the short term.
This bullish scenario is valid as long as the Nasdaq Composite index quotes above the support at 12640.00 points.
CHART IN DAILY DATA
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