Fundamental
Overview
The Nasdaq managed to
extend the rally into a new all-time high recently. The conditions for further
upside in the index remain in place.
In fact, Trump’s policies
will be a positive driver for growth in 2025 and with the Fed remaining in an
easing cycle, growth should remain positive and might even accelerate as
signalled already by the Atlanta Fed GDPNow indicator.
The only bearish reason we
had for the stock market was the rise in Treasury yields in the past couple of
months. That’s generally bearish only when the Fed is tightening policy though
not when yields rise on positive growth expectations.
Right now, the Fed’s
reaction function is that a strong economy would warrant an earlier pause in
the easing cycle and not a tightening. That should still be supportive for the
stock market.
If the Fed’s reaction
function were to change to a potential tightening, then that will likely
trigger a big correction in the stock market on expected economic slowdown. For
now, the pullbacks look as something healthy and opportunities to buy the dips.
Nasdaq
Technical Analysis – Daily Timeframe
Nasdaq Daily
On the daily chart, we can
see that the Nasdaq extended the rally into a new all-time high recently and
it’s now pulling back from the highs. The buyers will likely step in around the
previous all-time high at 21338 to position for further upside. The sellers, on
the other hand, will want to see the price breaking lower to increase the
bearish bets into the trendline around the 21100 level.
Nasdaq Technical
Analysis – 4 hour Timeframe
Nasdaq 4 hour
On the 4 hour chart, we can
see more clearly the recent breakout and the current pullback. There’s not much
we can glean from this timeframe, so we need to zoom in to see some more details.
Nasdaq Technical
Analysis – 1 hour Timeframe
Nasdaq 1 hour
On the 1 hour chart, we can
see that the price broke below the upward trendline that was defining the
bullish momentum. This is generally a sign of a loss in momentum which leads to
a consolidation or a pullback. We can see that we have an interesting zone
around the 21500 level where the price reacted from several times in the past
few days.
The sellers will likely step
in here to position for a drop into the 21338 level next. The buyers, on the other
hand, will look for a break higher to increase the bullish bets into new highs.
The red lines define the average daily range for today.
Upcoming Catalysts
Today we conclude the week with the US NFP report.