Last Friday, the Nasdaq Composite finished the day basically unchanged after the release of two key economic reports. The US NFP report beat expectations, with the market initially trimming rate cuts expectations and spiking downwards, but after a couple of minutes, the price reversed as under the hood the data wasn’t as good as it seemed. Sometime later, we got the release of the ISM Services PMI and that’s where the real shocker came from.
Besides the data missing across the board, the employment sub-index cratered to levels seen only in the dot-com recession, the global financial crisis and the covid recession. Although the market might keep on cheering about the upcoming rate cuts, these are bearish signals and they are coming right around the stock market highs, so the bulls should start to get extra careful going forward.
Nasdaq Composite Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Nasdaq Composite last Friday finished the day basically unchanged. The selloff might have gotten a bit overstretched as depicted by the price distance from the blue 8 moving average. In such instances, we can generally see a pullback into the moving average or some consolidation before the next move. From a risk management perspective, the sellers will indeed have a better risk to reward setup if the price were to pull back into the 14770 level.
Nasdaq Composite Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price recently broke below a strong support zone around the 14770 level where we had also the confluence with the daily 21 moving average, the lower bound of the channel and the 38.2% Fibonacci retracement level. This has opened the door for a fall into the next support around the 14050 level which is the current target for the sellers. The buyers will need the price to break above the support now turned resistance around the 14770 level to regain some control and start targeting new highs.
Nasdaq Composite Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the current price action and we can notice that the price has been diverging with the MACD recently. This is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, it might be a hint that we could indeed see a pullback into the 14770 level, but the price will first need to break above the most recent lower high around the 14625 level to confirm that. The sellers, on the other hand, are likely to step in both at the 14625 level and the 14770 resistance to position for further downside.
Upcoming Events
This week is basically empty on the data front with the only two notable releases scheduled for Thursday when we will get the US CPI report and the US Jobless Claims figures.
