(News Bulletin 247) – The flagship values of the American technology rating suffered a major setback yesterday, causing the Nasdaq Composite index to drop by nearly 5% yesterday (-4.99% to 12,317 points). Not only were the gains made after Wednesday’s FOMC outcome retraced, but the index fetched even lower, in even stronger volumes. While the market seemed reassured at the idea that J Powell ruled out the possibility of an upcoming 75 basis point hike in Fed Funds (after +50 bps on Wednesday), operators fear that the Fed will be cornered, and therefore forced to take very firm measures in the long term to control galloping inflation (+8.5% at an annual rate, food and energy included). Hence a passage of 10-year Treasuries beyond the symbolic bar of 3%.
The Fed is watching like milk on the fire for events that could inflate (or deflate) certain prices fairly quickly, such as the war in Ukraine and the idling of production capacity in China. It also monitors the degree of tension on the labor market, to anticipate any price/wage spiral. Exactly this Friday is the day of publication of the NFP report (for Non Farm Payrolls) for the month of April. In detail, it is a relative relief that emerges on this point, with an unemployment rate that remains almost stable at 3.6% of the working population (3.4% expected) and a rise in average hourly wages contained, at + 0.3%. Finally, the American economy created 428,000 jobs in the private sector (excluding agriculture).
KEY GRAPHIC ELEMENTS
The narrow trading range that we identified between 13,330 and 13,838 points was broken under conditions of volumes, volatility, and very significant candles. The marubozu plotted on Thursday 04/21 shows in particular a mobilization of the selling side throughout the session, until a close almost exactly on the low points, opening the way to a bearish target CT at 12,640 points. The latter was broken, after a hesitantly nervous hesitation on the second part of last week. We specified last Friday that “the shape of the weekly candle will be important.” It is indeed very unattractive, and it is also the fourth time in four weeks that the index has closed on its weekly lows. A pullback later, the warnings come on.
We specify Thursday: “The rebound of dispute started on Wednesday will probably not be followed by an extension on a bullish gap: a structure in harami is envisaged this Thursday.” In reality, the index was beyond the harami by brutally breaking the low points of May 4 and therefore the threshold of 12,640 points. The risks of a new close on the weekly lows are significant.
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 12640.00 points.
CHART IN DAILY DATA
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