FUNDAMENTAL OVERVIEW
The Nasdaq continues to erase the losses experienced last week as we approach the key US data releases. It’s going to be a big week as we get the US NFP report tomorrow and the US CPI on Friday. The main risk is that hot data triggers a hawkish repricing which could weigh on the market. The best outcome for the bulls should be some benign jobs data coupled with a softer than expected inflation report.
In fact, we should be in a “good news is good news” environment for the stock market amid the Fed’s dovish reaction function as long as inflation continues to slowly head towards target. A meaningful deterioration in the labour market at this point could trigger growth fears and lead to a deeper correction.
NASDAQ TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can see the Nasdaq extended the gains after bouncing near the November lows. The buyers are of course targeting new all-time highs, but we are now stuck in a clear range so we can expect the sellers to step in around the 26,390 resistance to position for a drop back into the 24,200 support.
NASDAQ TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we can see a downward trendline defining the bearish momentum. The sellers will likely lean on the trendline with a defined risk above it to position for a drop back into the November lows. The buyers, on the other hand, will look for a break higher to increase the bullish bets into new all-time highs.
NASDAQ TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we can see an upward trendline defining the bullish momentum on this timeframe. The buyers will likely continue to lean on the trendline to keep pushing into new highs, while the sellers will look for a break lower to pile in for a drop into the November lows. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Today we get the US December Retail Sales and the US Employment Cost Index data. Tomorrow, we have the US NFP report. On Thursday, we get the US Jobless Claims figures. On Friday, we conclude the week with the US CPI report.
