NASDAQ index leads the way in which to the draw back

The NASDAQ index is trading to a new session low and to the lowest level going back to August 12. The move to the downside is off of mixed/weaker US jobs report. The nonfarm payroll rose less than expectations (142K vs 160K estimate) with the prior months being revised lower by 86,000 as well. The unemployment rate did dip to 4.2% from 4.3% giving some “mix” to the numbers.

Fed’s William’s speaking soon after the report, initially did not jump on a 50 basis point cut when the Fed meets on September 18, which was disappointing to the market. He is just now saying he is unsure about 50 or 25 basis points.

There is a 63% probability of a September 25 basis point cut, and a 94% chance of a 50 basis point cut in November.

The NASDAQ index is now down -332 points or -1.96% at 16788.

Technically, looking at the hourly chart, recall from yesterday the corrective move to the upside stalled against its 200 hour moving average currently at 17272.22. That gave the sellers the advantage going into the jobs report. The high price today could only reach 17166.54, comfortably below that 200-hour moving average level. Sellers enter the market and have since pushed the price below a swing area target between 16984 and 17034.

More recently, the 50% midpoint of the move up from the August low to the August high has been breached at 16861.39. Getting and staying below that level would be increasingly more bearish and have traders looking down toward the 61.8% retracement at 16589.32.

Recall on August 5, the low price reaches all the way down to 15708.54. That was the day that the Japan’s Nikkei 225 fell by -12.4% in a single day.

So there is room between the low for the year and the current price. The question is was that tumble back at the beginning of August an overreaction to that carry trade liquidation?

Note that the day before the plunge on August 5th, the low price reached down near the 61.8% retracement level target outlined above at 16589.32. That increases the levels importance going forward. If the carry trade liquidation WAS an overreaction, perhaps it is a good target to aspire toward, but also a level for buyers to stick a toe in the water.