Fundamental Overview
Last Friday, Fed Chair Powell delivered a more dovish than expected speech at the Jackson Hole Symposium as he basically kept the door open for a 50 bps cut at the September meeting. The line saying that they will do everything they can to support a strong labour market was key.
Despite this, the Nasdaq failed to rally sustainably. The culprit could be related to something that we’ve already seen in the first week of July. In fact, the Russell 2000 extended the gains into new highs outperforming the major indexes, which suggests that the lack of follow through from the Nasdaq could be related to rotation.
Nasdaq Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Nasdaq broke above the key 19712 level and consolidated just above it. The buyers remain in control and will certainly target a new all-time high. The 19700 level is now a support zone and the sellers will need the price to fall below it to start looking for new lows.
Nasdaq Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we had a quick drop into the 19700 support last Thursday following the Flash US PMIs where the Manufacturing PMI fell further into contraction and might have triggered some profit-taking.
The dip-buyers piled in around the support and near the trendline to position for a rally into new highs. The sellers will want to see the price breaking below the trendline to position for a drop into the 18000 level.
Nasdaq Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a resistance zone around the 20000 level where the price got rejected from a couple of times in the past days. The buyers will want to see the price breaking higher to increase the bullish bets into a new all-time high, while the sellers will likely lean on it to position for a drop back into the 17800 support. The red lines define the average daily range for today.
Upcoming Catalysts
Tomorrow we have the US Consumer Confidence report. On Thursday, we get the latest US Jobless Claims figures. On Friday, we conclude with the US PCE report.
