Fundamental Overview
The Nasdaq posted its biggest daily decline since December 2022 yesterday as the rotation out of big tech stocks into more rate sensitive names continues. We can clearly see this internal market dynamic unfolding as the Russell 2000 and the Dow keep on gaining.
In the big picture, the fundamentals did not change, on the contrary the soft-landing narrative strengthened as we continue to see inflation falling while the economy continues to grow. This week, we got more positive data with US Retail Sales and Industrial Production beating expectations by a big margin.
It looks like the Fed is going to cut rates into a resilient economy and that should be a strong bullish driver.
Nasdaq Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Nasdaq had a pretty bad day yesterday posting the biggest daily decline since 2022. The price broke through some key levels and extended the move to the downside as the bearish momentum increased.
We now have another trendline around the 19700 level where we can expect the dip-buyers to step back in with a defined risk below the trendline to position for a rally into a new all-time high. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the next major trendline around the 19000 level.
Nasdaq Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a good resistance zone now around the 20300 level where we can find the confluence of the trendline, the previous resistance now turned support and the Fibonacci retracement levels.
If we get a pullback into the resistance, we can expect the sellers to step in to position for a drop into the 19700 level with a better risk to reward setup. The buyers, on the other hand, will want to see the price breaking above the resistance and the downward trendline to regain some control and position for a rally into new highs.
Nasdaq Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price is right in the middle of the key levels, so from a risk management perspective, there’s not much to do here. More aggressive sellers might pile in on a break below the yesterday’s low but the risk to reward setup would be worse. The red lines define the average daily range for today.
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Today we get the latest US Jobless Claims figures.
