(News Bulletin 247) – The Nasdaq Composite index (+3.19% to 12,964 points on Wednesday) took advantage of the decline in 10-year Treasuries just after the verdict of the Fed, which was completing a meeting of its Monetary Policy Committee. Obviously, J. Powell knew how to adopt the right tone, to be firm in his fight against inflation, without panicking the markets. In particular, made a point of specifying that increases of greater magnitude (75 bps) were not “actively considered” by the members of the Board. A less aggressive tone than the market feared since the beginning of the week, and which allowed an easing movement on government bond yields. As expected, the FOMC ended with a 50 basis point hike in Fed Funds and the announcement of the start of the gradual reduction of its balance sheet.
Ronan Blanc, Managing Analyst at Financière Arbevel, notes that the Federal Reserve “is therefore not giving in to ever-increasing market expectations while remaining vigilant on the price front (risk still high post-invasion of Ukraine, not to mention the lockdowns in China). It also considers (rightly) that quantitative tightening is a mechanism that will also contribute to the tightening of credit conditions.” For the coming months, the Fed will have to take into account the chronic tensions on the labor market, tensions which themselves generate inflation.. Before the publication this Friday of the federal NFP (Non Farm Payrolls) report, investors had a “taste” yesterday with the publication a few minutes ago of the ADP survey. The private human resources firm highlighted 247,000 job creations in the private sector (excluding agriculture) last month, well below expectations (more than 380,000). New index this Thursday, with new registrations for unemployment benefits, around 200,000 new units over the past week.
KEY GRAPHIC ELEMENTS
The thin 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 traced 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 specify on 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. The rebound of protest initiated yesterday will probably not be followed by an extension on a bullish gap: a structure in harami is planned for Thursday.
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 13330.00 points.
CHART IN DAILY DATA
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