FUNDAMENTAL
OVERVIEW
The Nasdaq futures opened lower today following Trump’s escalation over Greenland. In fact, the US President threatened to impose 10% tariffs starting on February 1 on the UK, France, Germany and a few other European countries unless the U.S. is permitted to buy Greenland. The tariffs will rise to 25% from June 1 in case of no deal.
As seen last year, risk-off moves caused by Trump’s tariffs stemmed from growth worries. Growth expectations are the main driver of stock markets and when something leads to negative expectations, we generally get selling pressure until those expectations are corrected.
Everyone is now waiting for the famous TACO (“Trump Always Chickens Out”) trade. The market’s focus in now on this latest escalation, so monitoring the developments will be key and will offer trading opportunities. The risk sentiment will likely stay on the defensive until we get some clear de-escalation from Trump. If things escalate further, we should see more downside before Trump eventually folds.
As a reminder, the US cash equity markets are closed today for Martin Luther King Jr. Day.
NASDAQ TECHNICAL
ANALYSIS – DAILY TIMEFRAME
Nasdaq – daily
On
the daily chart, we can see that
the Nasdaq broke out of the rising wedge to the
downside following Trump’s escalation over Greenland. The natural target is
generally the base of the wedge, which in this case stand around the 24,900
level. We might need further escalation or just no positive developments to
keep the bearish pressure intact.
If the price gets there, we can expect the dip-buyers to step in with a defined
risk below the 24,900 level to position for a rally into new all-time highs.
The sellers, on the other hand, will look for a break lower to increase the
bearish bets into the 24,200 level next.
NASDAQ TECHNICAL
ANALYSIS – 4 HOUR TIMEFRAME
Nasdaq – 4 hour
On
the 4 hour chart, we can see that
the price has fallen to the first key swing level around 25,270. This is going
to be the first dip-buying opportunity with a defined risk below the swing
level. The sellers, on the other hand, will want to see the price breaking
lower to increase the bearish bets into the 24,900 level next.
NASDAQ TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAME
Nasdaq – 1 hour
On the 1 hour chart, there’s
not much we can add here as the buyers will likely start piling in around these
levels to position for a rally into new highs, while the sellers will wait for
a break lower to increase the bearish bets into the next key level.
UPCOMING CATALYSTS
Tomorrow we have the weekly US ADP jobs data. On Thursday, we get the latest US
Jobless Claims figures. On Friday, we have the US Flash PMIs. Watch out also
for headlines and Trump’s posts on Truth Social regarding Greenland as the
market’s focus remains on this latest trade war.
