Last Friday, the Nasdaq Composite rallied despite the ISM Manufacturing PMI missing expectations and falling further into contraction. The market is still trading based on rate cuts expectations as the trigger for the rally was a neutral Fed Chair Powell speech where he didn't push back against the market's pricing. The market seems to be all-in on the soft-landing trade and ignoring the weakening economic data, especially on the labour market side. The sentiment is also getting a bit bubbly right when things might really go south, so the buyers might want to be extra cautious going forward.
Nasdaq Composite Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Nasdaq Composite failed to rally as much as the other major indices as it continues to consolidate just below the cycle high at 14446. From a risk management perspective, it doesn’t make much sense buying at these levels both from a fundamental and technical point of view. We could see some more profit taking which could lead to a decent pullback, while the sellers should continue to pile in here with a defined risk above the cycle high to target a drop into new lows.
Nasdaq Composite Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price has been diverging with the MACD into the cycle high. This is generally a sign of weakening momentum often followed by pullbacks or reversals. We indeed got a pullback with the buyers already piling in near the most recent swing low, but right now there’s not much to do as there’s no significant level to lean on.
Nasdaq Composite Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price has been diverging with the MACD since the breakout of the key resistance zone around the 13700 level. The sellers should lean on the cycle high to target a drop into new lows and increase the bearish bets with breaks below the 14050 and 13700 supports. The buyers, on the other hand, will want to lean on those same supports to position for new highs.
Upcoming Events
This week we will see lots of US labour market data culminating with the NFP release on Friday. Tomorrow, we have the ISM Services PMI and the US Job Openings reports. On Wednesday, we will get the US ADP data. On Thursday, it will be the time for the US Jobless Claims figures, while on Friday we conclude the week with the NFP report.
