Despite good economic data like lower core inflation, stable jobless claims, lower inflation expectations and strong consumer spending that support the soft-landing narrative, the Nasdaq Composite just keeps on falling with very shallow pullbacks. One of the main reasons might be the non-stop rally in long term yields and real yields as it makes financial conditions tighter ultimately weighing on the stock market. The good economic data might also be interpreted as bad news because inflation might remain higher for longer requiring more tightening from the Fed. There’s no easy answer at the moment, so the technicals should be more helpful.
Nasdaq Composite Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Nasdaq Composite eventually broke the key trendline and it’s now eyeing the 13174 support. That’s where we can expect the buyers to step in with a defined risk below the support and target the 14650 high again. The sellers, on the other hand, will want to see another break to pile in even more and extend the selloff into the 12274 level.
Nasdaq Composite Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the Nasdaq Composite just keeps on breaching key levels as the bearish trend remains strong with the moving averages crossed to the downside and the price printing lower lows and lower highs. We are likely to see the sellers step in again if we get a pullback.
Nasdaq Composite Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a divergence with the MACD which is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, we might see a pullback into the downward trendline where the sellers are likely to pile in with a defined risk above the trendline. The buyers, on the other hand, will need the price to break above the trendline to switch to bias to the upside and start entering the market with more conviction.
Upcoming Events
The only top tier economic indicator left is the US Jobless Claims report scheduled for today. The market has been weak in the past days even in the face of good data, so we might be at a point where bad data causes recessionary fears and good data leads to higher rates expectations. It’s possible that the market is more likely to react positively to data that it’s not too cold nor too hot, so big deviations might be bearish either way.
