Fundamental Overview
This week the growth fears came back as the we got a couple of soft US data. Most of the weakness can be attributed to the ISM Manufacturing PMI which disappointed as it missed expectations, and the new orders index dropped further into contraction.
Overall, the report was much better than the prior month, but it looks like the market wants to err on the defensive side heading into the NFP report tomorrow. We also got the US Job Openings data yesterday, but it was July’s data which was bad for many other indicators as it looks like short term factors negatively affected the data.
We are going into the NFP report with a 50/50 chance of either a 25 bps or 50 bps cut at the upcoming meeting, so the data tomorrow will decide by how much the Fed is going to cut.
In today’s context though, weaker labour market data and the prospect of a 50 bps cut might not be enough to lift the stock market and could actually lead to more downside on recessionary fears, so that’s something to keep in mind.
Nasdaq Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Nasdaq eventually couldn’t break back above the 19728 level and sold off into the 18900 level as the US data disappointed the market. The next support is near at 18737 level where we can expect the buyers to step in with a defined risk below the level to position for a rally into new highs. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the major trendline.
Nasdaq Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price got rejected from the swing low level at 19135. This is going to be a key level the buyers will need to break to position for a rally into the downward trendline around the 19500 level. The sellers, on the other hand, will likely lean on the 19135 level to position for a break below the 18737 level.
Nasdaq Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see the rangebound price action as we await the NFP release. Today we will also get other labour market data but unless we get big surprises, it’s unlikely to see a breakout today. The red lines define the average daily range for today.
Upcoming Catalysts
Today we have the US ADP, the US Jobless Claims and the US ISM Services PMI. Tomorrow, we conclude the week with the US NFP report.
