Despite worrisome factors such as a higher unemployment rate and lower average weekly hours, the recent release of the NFP data has had minimal impact on the Nasdaq Composite. The labour market has exhibited resilience, albeit with some looseness, which could potentially result in lower inflation without causing severe harm to the economy.
Furthermore, the underperformance of the ISM Services PMI has not affected the market significantly. Instead, speculation has arisen from the sub-index indicating lower prices paid, suggesting the possibility of decreased core inflation without substantial damage.
The market cautiously considered the significant miss in Jobless Claims, taking into account the impact of seasonal adjustments, while also acknowledging the improvements seen in Continuing Claims. Overall, the market chose to emphasize the positive aspects of the data rather than dwell on the negatives.
Nasdaq Composite Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Nasdaq Composite started to struggle a lot just above the key 13174 swing level. The index has been curiously underperforming its peers recently prompting some speculation that we may be peaking. It had a great run since breaking out of the bullish flag back in March, but the good news are getting exhausted and we are entering a period where the data is expected to show either a deterioration in the economy or a stickier inflation.
Nasdaq Composite Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that if were to get a pullback, the nearest support zone is at the upward trendline where we can also find a previous swing support and the 61.8% Fibonacci retracement level. From a risk management perspective, that’s the best level where the buyers can re-enter the market with a defined risk just below the support zone.
The sellers, on the other hand, are probably already piling in here to target the trendline and a possible breakout, while more conservative sellers may be waiting for a break of the trendline first before jumping onboard to target the 12274 support.
Nasdaq Composite Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we’ve been diverging with the MACD right at this resistance level. This is generally a sign of weakening momentum often followed by pullbacks or reversals. The fact that we are seeing it here makes it more significant. A break below the minor upward trendline would give the sellers even more conviction for a fall into the major upward trendline where we are likely to find the buyers fighting for more upside.
This week holds a series of significant events for the Nasdaq Composite. It all starts with the eagerly awaited US CPI report scheduled for tomorrow. This report is anticipated to have a crucial influence on shaping the market's expectations for the upcoming FOMC rate decision, which is scheduled for the following day. Additionally, later in the week, we can expect another Jobless Claims report and the release of the University of Michigan consumer sentiment survey. The previous release of this survey had a notable impact on the market, primarily driven by a substantial surge in long-term inflation expectations.
