Yesterday, the Nasdaq Composite finished the day basically flat as the market might be waiting for the US CPI release tomorrow before taking a direction. In fact, another hot report could change the near-term Fed’s strategy and trigger a hawkish reaction putting more pressure on the stock market. On the other hand, data in line with expectations or even lower will likely lead to a positive risk sentiment driving the market to new highs.
Nasdaq Composite Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Nasdaq Composite has been diverging with the MACD for a long time. This is generally a sign of weakening momentum often followed by pullbacks or reversals. The price recently broke out of the rising wedge which opened the door for a bigger correction into the 14477 level. The price has been consolidating around the highs for quite some time now and we will likely need to wait for the US CPI report tomorrow to decide where to go next.
Nasdaq Composite Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price last Friday rallied following the goldilocks NFP report and it’s now trading back above the critical 16206 level. If the price were to continue lower and fall below the 16206 level again, we can expect the sellers to pile in more aggressively to extend the drop into the first support level at 15929. That’s also where we can expect the buyers to step in with a defined risk below the support to position for a rally back into a new all-time high.
Nasdaq Composite Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the recent price action with the price getting rejected several times from the black counter-trendline except the fakeout on the 4th of April. We got yet another rejection yesterday as the price continued to consolidate just beneath the counter-trendline. The market might be waiting for the US CPI release before taking a direction and even if we get a breakout, the buyers will need to be careful as a hot report could trigger a strong selloff.
Upcoming Events
Tomorrow we have the US CPI report which will likely decide if the Fed is going to delay rate cuts further. On Thursday, we get the US PPI and the latest US Jobless Claims figures. Finally, on Friday we conclude the week with the University of Michigan Consumer Sentiment survey.
