It’s increasingly evident that the market is taking the weaker labour market data as good news for inflation and the soft-landing scenario. In fact, last week we got many big misses heading into the NFP report, but the US Jobless Claims showed that the labour market is still fine and the NFP beat expectations. We have also got a jump in the unemployment rate, but it was accompanied by a rise in the participation rate and the average hourly earnings surprised to the downside, which is another good news for inflation. The market doesn’t expect the Fed to hike anymore, so the next stop might be the rate cuts. Historically though, the market falls when the Fed starts to cut rates because those generally come in response to a recession.

Nasdaq Composite Technical Analysis – Daily Timeframe

Nasdaq Composite Technical Analysis
Nasdaq Composite Daily

On the daily chart, we can see that the Nasdaq Composite bounced strongly on the key 13174 support and rallied all the way back to test the broken trendline. The price is now struggling a bit around the trendline, but the trend has turned more bullish as the price has been printing higher highs and higher lows and the moving averages have crossed to the upside.

Nasdaq Composite Technical Analysis – 4 hour Timeframe

Nasdaq Composite Technical Analysis
Nasdaq Composite 4 hour

On the 4 hour chart, we can see that we had a strong resistance around the trendline where we had the confluence of the previous support turned resistance and the 61.8% Fibonacci retracement level. The breakout opened the door for higher prices and the buyers are likely to pile in here with a defined risk below the support to target the 14659 high.

Nasdaq Composite Technical Analysis – 1 hour Timeframe

Nasdaq Composite Technical Analysis
Nasdaq Composite 1 hour

On the 1 hour chart, we can see that we recently got a pullback into the resistance turned support where we can expect the buyers to step in. If the price fails to bounce on the support zone and continues lower, then we can expect the sellers to pile in to extend the fall into the minor trendline around the 13800 level. If the price then breaks through that trendline as well, it will open the door for a selloff into the 13174 support.

Upcoming Events

Today is the US Labor Day so the markets will be closed. This week is pretty empty on the data front with just the US ISM Services PMI scheduled for Wednesday and the US Jobless Claims on Thursday. The market has shown strong resilience to weaker data in the past weeks and it’s hard to tell how much bad the data needs to be to bring it down. One thing that held pretty well is the US Jobless Claims, so much worse than expected readings might trigger a selloff.