The selloff that started at the beginning of August is starting to show signs of weakness. Although nothing changed fundamentally, the Nasdaq Composite started to rise as the market was just probably overstretched. This looks more like a pullback as the miss in yesterday’s US PMIs doesn’t support the bullish case.
Nasdaq Composite Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Nasdaq Composite bounced from a key support level at 13174 and rallied back strongly into the broken trendline and the red 21 moving average. This is where we can expect the sellers to pile in with a defined risk above the trendline to target a break below the 13174 support.
Nasdaq Composite Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more closely the strong bounce on the 13174 support and the strong resistance that we have around the 13820 level where we can also find the confluence with the Fibonacci retracement levels and the previous support now turned resistance.
Nasdaq Composite Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see the resistance zone with the market likely to open today around those levels as Nvidia yesterday after the close crushed expectations across the board. So, at the open we might see a “sell the fact” but more conservative sellers may want to wait for the price to fall below the black counter-trendline first before positioning for more downside.
Upcoming Events
Today we will have the latest US Jobless Claims report where the market will want to see if the labour market is still holding or starting to weaken. Strong data may cause some hawkish repricing in expectations and it’s unclear if the market will take it as good news because of the resilient labour market or bad news because the Fed will keep at it. Weak data should be more straight forward as it’s likely to cause recessionary fears given the yesterday’s PMIs and send the market lower. Tomorrow we will hear from Fed Chair Powell who is set to speak at the Jackson Hole Symposium, although the expectations are for him to just repeat their data dependency and keep all the options on the table.
