Fundamental
Overview
The US CPI yesterday came mostly in line with
expectations and wasn’t strong enough to force a reassessment on a September
cut. In fact, the pricing for the Fed actually increased from 57 bps of easing
by year-end to 61 bps after the US CPI report.
The majority of Fed voters
are also on board for a cut in September so now we will likely need a hot NFP
to reduce the probabilities towards the 50% chance, although it’s more likely
that the market will just price out the chances for the future cuts.
The focus now switches to
Fed Chair Powell’s speech at the Jackson Hole Symposium, although he will
likely either join his colleagues or just repeat that they will decide based on
the totality of the data.
For the stock market, this
is all good news as the Fed’s dovish reaction function despite a resilient
economy, keeps growth expectations skewed to the upside favouring the bullish
trend. This is a train that can’t be stopped unless the Fed changes its stance
(opening the door for hikes) or we get some negative growth event like we’ve
seen in April.
Nasdaq
Technical Analysis – Daily Timeframe
On the daily chart, we can
see that the Nasdaq extended the gains into new all-time highs as the FOMO is
now kicking in. From a risk management perspective, the buyers will definitely
have a better risk to reward setup around the trendline to position for further upside, but
we will need a big pullback for that which is not expected at least until
September. For the sellers, a break below the trendline would open the door for
an even deeper pullback into the 22,400 level.
Nasdaq Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can
see that we have a minor trendline defining the bullish momentum on this
timeframe. If we get a pullback, the buyers will likely lean on the trendline
with a defined risk below it to position for a rally into new highs. The sellers,
on the other hand, will look for a break lower to pile in for a drop into the major
trendline.
Nasdaq Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, there’s
not much we can add here as entering now is basically chasing the price.
Nonetheless, aggressive buyers could step in around the minor support at 23,965 with a defined risk below it to keep
pushing into new highs, while the sellers will look for a break lower to
position for a pullback into the trendline. The red lines define the average daily range for today.
Upcoming Catalysts
Tomorrow we get the US PPI and the US Jobless
Claims figures. On Friday, we conclude the week with the US Retail Sales and
the University of Michigan Consumer Sentiment report. Focus also on Fedspeak,
especially after yesterday’s US CPI data.
This article was written by Giuseppe Dellamotta at investinglive.com.