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
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
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
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.
