Nasdaq Composite: Bond thermometer continues to rise, pressure on growth records

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(News Bulletin 247) – The Nasdaq Composite index, after an abortive attempt to rebound yesterday, should open for the last session of the week in the red, still under the weight of bond yields since the Fed increased its pressure. It is actually the whole question of the probability of a soft landing that is posed. “During his speech on price stability, Jerome Powell recognized that the current context did not make a “soft landing” of the economy obvious,” note the strategists of Lazard Frère Gestion in a note on the situation. “In other words, the Fed may need to implement a very sharp slowdown in growth to ease labor market tensions and stem inflationary pressures, which continue to build.”

“The transition from a regime of high inflation and high growth to a regime of high inflation but lower growth obviously impacts the performance of the various asset classes and sectors. The upside potential of equity markets is more limited overall and defensive sectors (health, financials, consumer staples, etc.) outperform cyclical sectors”, summarize Laurent Gonon, Director of Investments and Warin Buntrock, Deputy Director of Investments at BFT IM. By comparison, the short-term underperformance of growth stocks – as we have clearly seen this week – is spectacular. However, the index that interests us here has a statistical bias Growth, by its composition and weighting in technological stocks, very high.

In statistics on Thursday, new jobless claims in the United States came out in sharp contraction at 166,000 for week 13, beating the target. To follow in priority, on the agenda this Friday, the stocks of American wholesalers at 4:00 p.m.

Essential barometer for who wants to work the index currently: the Treasuries 10 years continued their rise in temperature, now exceeding 2.72.

KEY GRAPHIC ELEMENTS

On the technical side, as long as the flagship index of technology stocks on the American side remains above 13,838 points, nothing is to be feared. This is a technical threshold easily regained, on a combination of candles in “three advancing soldiers”, from March 16 to 18. A move below 14,445 points was validated on Thursday signifying a reintegration of a trading range above 13,330 points. All against a background of divergence between prices and volumes. Two bearish CT targets are currently locked: 13,840 (we are there) and 13,330 points. The volumes are put under surveillance.

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 14660.00 points.

CHART IN DAILY DATA

©2022 News Bulletin 247

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