Fundamental Overview
The Nasdaq had a good performance at the start of last week following the US CPI report as the data came mostly in line with expectations. In the following days though, we got some hottish data with the US PPI beating expectations by a big margin, the US Jobless Claims improving further and the inflation expectations in the UMich survey surprising to the upside.
Following the data, traders turned their attention to Fed Chair Powell’s speech at the Jackson Hole Symposium on Friday. The risk of something hawkish led to profit-taking and some hedging into the event, which eventually turned into a deeper pullback.
Most likely, Powell won’t pre-commit to anything and just reiterate that they will decide based on the totality of the data. This is the baseline expectation. If he were to signal a rate cut in September, then the Nasdaq will likely rally as hedges get unwound.
Conversely, if he were to close the door for September by saying something like “we might not have enough data to consider a rate cut in September”, it would be interpreted as hawkish, and we should see more downside for the stock market.
Nasdaq Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Nasdaq pulled all the way back to the major upward trendline. This is where we can expect the dip-buyers to step in with a defined risk below the trendline to position for a rally into a new all-time high. The sellers, on the other hand, will look for a break lower to extend the pullback into the 22,800 level next.
Nasdaq Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we had a minor upward trendline defining the bullish momentum on this timeframe. As the price broke below the trendline, the sellers piled in to position for a pullback into the major trendline and the defensive plays into Jackson Hole did the rest.
There’s not much else we can add here as the buyers will likely pile in around these levels to target a new all-time high, while the sellers will wait for a break lower to increase the bearish bets into new lows.
Nasdaq Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have now a minor downward trendline defining the bearish momentum on this timeframe. The sellers will likely lean on the trendline to position for a drop into new lows with a better risk to reward setup. The buyers, on the other hand, will look for a break higher to increase the bullish bets into new all-time highs. The red lines define the average daily range for today.
Upcoming Catalysts
Today we have Fed’s Waller speaking and the FOMC meeting minutes. Tomorrow, we get the US Flash PMIs as well as the US Jobless Claims figures. Finally, on Friday, we conclude the week with Fed Chair Powell speech at the Jackson Hole Symposium.
