Fundamental
Overview
The Nasdaq continues to
remain under pressure with the market now down more than 14% from the all-time
highs. The catalyst of the entire selloff was back on February 21st
when we got the weak US PMIs coupled with a new 30-year high in the long term
inflation expectations in the University of Michigan Consumer Sentiment survey.
The market started to fear
that in case we get a slowdown, the Fed might not be fast enough in cutting
rates amid the inflation constraint and eventually worsen the economic pain.
Moreover, the uncertainty around Trump’s tariffs add to those expectations of a
slowdown in growth and potentially higher inflation in the short-term.
We can argue that Trump
chose the worst time possible to start his trade war as the context is
different from his first term when inflation wasn’t a problem. In fact, the
market might have swallowed his trade war if it wasn’t for the inflation
constraint that limits the Fed’s reaction.
As Dario Perkins from TS
Lombard noted, when you want to do fiscal consolidation and avoid a recession,
you need help from a dovish monetary policy. This help is constrained at the
moment due to inflation being above the target and uncertainty about higher
inflation expectations.
Tomorrow, we have the US
CPI report and the market will need soft figures to trigger a relief rally,
otherwise in case of hot data we could be up to much more pain ahead.
Nasdaq
Technical Analysis – Daily Timeframe
Nasdaq Daily
On the daily chart, we can
see that the Nasdaq dropped below the major trendline which doesn’t give it a good
look at all. From a risk management perspective, the sellers will have a better
risk to reward setup around the broken trendline where they can position with a
defined risk above the trendline to target a drop into the 18000 level next.
The buyers, on the other hand, will want to see the price rising back above the
trendline to regain some conviction and pile in for a rally into new all-time
highs.
Nasdaq Technical
Analysis – 4 hour Timeframe
Nasdaq 4 hour
On the 4 hour chart, we can
see that we have a downward trendline defining the bearish momentum. If the
price pulls back into it, we can expect the sellers to lean on the trendline to
position for another selloff into new lows, while the buyers will look for a
break higher to gain more conviction and increase the bullish bets into a new
all-time high.
Nasdaq Technical
Analysis – 1 hour Timeframe
Nasdaq 1 hour
On the 1 hour chart, there’s
not much we can add here as the sellers will look for a rejection around the
trendline, while the buyers will look for a break higher to target new highs.
The red lines define the average daily range for today.
Upcoming Catalysts
Today we get the US Job Openings data.
Tomorrow, we have the US CPI report. On Thursday, we get the US PPI data and
the US Jobless Claims figures. On Friday, we conclude the week with the
University of Michigan Consumer Sentiment report.
