Yesterday was the Presidents Day holiday so the stock market was closed. Today the trading restarts and it will be interesting to see if the Nasdaq Composite fades the pullback from the hot US PPI report on Friday or extends the losses breaking the key levels. In the bigger picture, the only thing that has changed is some reacceleration in inflation recently but it’s not yet clear if it’s just a seasonal blip or the start of a trend.
The Fed is not worried as the members recently mentioned that they expected the progress towards their goal to be bumpy. In fact, as things stand, we might just get a delay of rate cuts but not further rate hikes. Given the reacceleration in economic activity this might keep the stock market supported until the fears around inflation become stronger.
Nasdaq Composite Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Nasdaq Composite last Friday fell into the close following a hot US PPI report. The price is now near the key trendline so we can expect a retest where the buyers will look to buy into the dip to position for a rally into the all-time high. The sellers, on the other hand, will want to see the price breaking lower to invalidate the bullish setup and position for a drop into the 15150 support.
Nasdaq Composite Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that besides the trendline we have also the confluence with the 50% Fibonacci retracement level and the previous resistance now turned support. What happens around this level will likely define where the market will go in the next few weeks.
Nasdaq Composite Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the recent price action with the key support zone around the trendline marked by the green box. This gives us a pretty textbook trading setup with the buyers looking for a bounce and a rally into the all-time high, and the sellers looking for a break and a drop into the next support at 15150.
Upcoming Events
This week is basically empty on the data front with just the release of the FOMC Meeting Minutes tomorrow followed by the US Jobless Claims and the US PMIs on Thursday.
