Fundamental Overview
The Nasdaq managed to extend the rally into a new all-time high recently. The conditions for further upside in the index remain in place.
In fact, Trump’s policies will be a positive driver for growth in 2025 and with the Fed remaining in an easing cycle, growth should remain positive and might even accelerate as signalled already by the Atlanta Fed GDPNow indicator.
The only bearish reason we had for the stock market was the rise in Treasury yields in the past couple of months. That’s generally bearish only when the Fed is tightening policy though not when yields rise on positive growth expectations.
Right now, the Fed’s reaction function is that a strong economy would warrant an earlier pause in the easing cycle and not a tightening. That should still be supportive for the stock market.
If the Fed’s reaction function were to change to a potential tightening, then that will likely trigger a big correction in the stock market on expected economic slowdown. For now, the pullbacks look as something healthy and opportunities to buy the dips.
Nasdaq Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Nasdaq extended the rally into a new all-time high recently and it’s now pulling back from the highs. The buyers will likely step in around the previous all-time high at 21338 to position for further upside. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the trendline around the 21100 level.
Nasdaq Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more clearly the recent breakout and the current pullback. There’s not much we can glean from this timeframe, so we need to zoom in to see some more details.
Nasdaq Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price broke below the upward trendline that was defining the bullish momentum. This is generally a sign of a loss in momentum which leads to a consolidation or a pullback. We can see that we have an interesting zone around the 21500 level where the price reacted from several times in the past few days.
The sellers will likely step in here to position for a drop into the 21338 level next. The buyers, on the other hand, will look for a break higher to increase the bullish bets into new highs. The red lines define the average daily range for today.
Upcoming Catalysts
Today we conclude the week with the US NFP report.
