Last week, the US CPI came basically in line with expectations, but the good news is that the Core M/M reading once again printed at 0.2% or 0.16% unrounded. The not so good news is that the US Initial Claims spiked higher coming at 248K vs. 230K expected, but Continuing Claims remained strong. We have already seen Claims spiking higher in the past months, but the overall picture remains positive for now. The long-term inflation expectations in the University of Michigan report ticked lower, so on the data side the week was positive. Nonetheless, the Nasdaq Composite finished the week negative and it’s hard to find a clear reason other than a technical pullback or global growth worries.
Nasdaq Composite Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Nasdaq Composite was diverging with the MACD while approaching the key 14649 resistance and this is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, we are still in the pullback scenario as the price is now at a key trendline where we should expect the buyers stepping in and target the 14649 resistance. If the price breaks lower, we might be in front of a reversal and the sellers are likely to pile in aggressively to extend the selloff into the 13174 support.
Nasdaq Composite Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price has recently broke a key support level and extended the fall into the trendline. The current momentum is undoubtedly bearish as we can also see from the price printing lower lows and lower highs and the moving averages being crossed to the downside. The next big move is likely to be decided here at the trendline.
Nasdaq Composite Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have another divergence with the MACD but this time it’s supporting the bullish case. In fact, this might be an extra confirmation for the buyers that we are about to see a bounce as the bearish momentum is waning. More conservative buyers may want for the price to break above the top trendline of the channel and the 13850 support turned resistance.
Upcoming Events
This week is a bit empty on the data front and the lower summer liquidity might trigger false moves. On Tuesday we will see the latest US Retail Sales report where the market is likely to react positively in case of a beat and negatively in case of a miss. The US Jobless Claims on Thursday is likely to be the main event of the week as another big miss may cause recessionary fears and weaken the market even more, while strong data should give the Nasdaq Composite some support.