Fundamental
Overview
The Nasdaq rallied strongly
on Friday as Fed Chair Powell tilted more dovish by saying that “with policy in
restrictive territory, the baseline outlook and the shifting balance of risks
may warrant adjusting our policy stance.”
That saw traders firming up
expectations for a rate cut in September which now stands around 84%
probability with a total of 54 bps of easing by year-end. Overall, it’s not the
repricing in interest rates expectations that supported stocks but hedges into
potentially hawkish Powell being unwound.
Now, the focus turns to the
US NFP report next week which is going to be crucial and will influence greatly
interest rates expectations.
Strong data might take the
probability for a September cut towards a 50/50 chance but will certainly see a
more hawkish repricing further down the curve which could weigh on the market
in the short-term.
Soft data, on the other
hand, will likely see traders increasing the dovish bets with a third cut by
year-end being priced in and likely support the stock market.
Nasdaq
Technical Analysis – Daily Timeframe
Nasdaq Daily
On the daily chart, we can
see that the Nasdaq recently fell below the major upward trendline but eventually rallied back
above it following Powell’s dovish tilt. There’s not much else we can glean
from this timeframe, so we need to zoom in to see some more details.
Nasdaq Technical
Analysis – 4 hour Timeframe
Nasdaq 4 hour
On the 4 hour chart, we can
see that we might be forming a range between the 23,375 support
and the 23,650 resistance. The price broke above the downward trendline
yesterday which should give the buyers more control.
If we get another pullback
into the support, the buyers will likely step in there with a defined risk
below it to position for a rally into a new all-time high. The sellers, on the
other hand, will likely pile in around these levels to target a pullback into
the support and eventually a breakout.
Nasdaq Technical
Analysis – 1 hour Timeframe
Nasdaq 1 hour
On the 1 hour chart, we can
see that we have now a minor upward trendline defining the bullish momentum on
this timeframe. The buyers will likely lean on it to keep pushing into new
highs, while the sellers will look for a break lower to extend the pullback into
the support. The red lines define the average daily range for today.
Upcoming Catalysts
Today we have Nvidia earnings after market
close. Tomorrow, we get the latest US Jobless Claims figures. On Friday, we
conclude the week with the US PCE price index.
