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 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 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 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.