Fundamental
Overview
The soft NFP report on Friday weighed on the risk sentiment
as growth expectations took a hit. The Nasdaq fell to new lows before erasing
most of the losses today as Fed’s Williams said over the weekend that he would
go into the September meeting with “very much an open mind”.
Overall, the data wasn’t as
bad as one might think by just looking at the reaction in the markets but given
that we were positioned for a strong report, it might have caught people by
surprise. The market is now pricing 58 bps of easing by year-end for the Fed
compared to just 35 bps before the NFP release.
Higher chances of easing
and lower inflation figures from the ISM Manufacturing and UMich reports,
should be supportive for the stock market going forward. We have the ISM
Services PMI and the Jobless Claims data this week.
A combination of lower
inflation in the ISM and good jobless claims figures might give further boost
to the Nasdaq to push into new highs as the market will start to look forward
to Fed Chair Powell opening the door for a cut in September at the Jackson Hole
Symposium.
Nasdaq
Technical Analysis – Daily Timeframe
Nasdaq Daily
On the daily chart, we can
see that the Nasdaq eventually extended the pullback following the slightly
more hawkish Fed Chair Powell and then the softer than expected NFP report. If
the pullback extends further, we can expect the buyers to step in around the 22,400
ish support to position for another leg higher. The
sellers, on the other hand, will look for a break lower to increase the bearish
bets into the 21,000 level next.
Nasdaq Technical
Analysis – 4 hour Timeframe
Nasdaq 4 hour
On the 4 hour chart, we can
see that the dip-buyers piled in at the trendline around the 22,800 level. Technically,
the buyers couldn’t ask for a better setup as it gave a great risk to reward
trade with a clear invalidation below the trendline. The sellers will need the
price to break below the low to invalidate the bullish setup and increase the
bearish bets into the 22,400 support next.
Nasdaq Technical
Analysis – 1 hour Timeframe
Nasdaq 1 hour
On the 1 hour chart, we can
see that we had a downward trendline defining the pullback into the upward
trendline and, as the price broke above it, the buyers increased the bullish
bets into new highs. We have also a minor support around the 23,000 level that
is also the neckline of the potential double bottom. If the price pulls back into it,
we can expect the buyers to lean onto that level to keep pushing into new
highs, while the buyers will look for a break lower to start targeting a break
below the major trendline.
Upcoming Catalysts
Tomorrow we have the US ISM Services PMI and
on Thursday, we get the latest US Jobless Claims figures.
