KEY POINTS:
- Nasdaq price action remains rangebound but with a bullish bias
- Pullback in Fed support turned the focus heavily towards data
- Reaction to negative labour market data likely to reverse in 2026 as inflation remains a constraint for the Fed
FUNDAMENTAL OVERVIEW
Since the peak in late October, the Nasdaq has been bouncing around as the overstretched long positioning was met with a less dovish Fed. The market maintains the bullish bias amid a strong economy and the Fed’s dovish reaction function, but lacks the momentum seen in 2025 when Trump pulled back on aggressive tariffs and the Fed was in a clear easing mode.
This year the main risk for the bullish outlook is inflation. The “run it hot” narrative continues to underpin stocks, and we’ve seen from the latest GDP report and the Atlanta Fed GDPNow how the economy looks to be accelerating. That hasn’t translated into persistent inflationary pressures besides the tariff driven spike in the summer.
I have a feeling that US CPI will be more important in the next months because inflation worry is what is constraining the Fed from acting more quickly and with more conviction on rate cuts. In fact, while weak labour market data was seen as positive for the stock market on expectations of more Fed cuts, this year it might be seen as negative if it comes with higher CPI data due to the above-mentioned constraint.
NASDAQ TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can see that the Nasdaq has been compressing into a rising wedge. These types of patterns can resolve into a downside breakout taking the price to the base of the wedge or an upside breakout leading to a strong rally after the consolidation.
NASDAQ TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we can see more clearly the recent choppy price action that formed the rising wedge. From a risk management perspective, the buyers will have a better risk to reward setup around the bottom trendline to position for a rally into new all-time highs. The sellers, on the other hand, will want to see the price breaking lower to pile in for a drop into the base of the wedge around the 24900 level.
NASDAQ TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we can see that we have a minor upward trendline defining the current bullish momentum on this timeframe. The buyers will likely continue to lean on the trendline to keep pushing into the top trendline of the wedge, while the sellers will look for a break lower to extend the drop into the bottom trendline. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Today we conclude the week with the US NFP report and potential US Supreme Court decision on Trump’s tariffs.
