Basic Overview
Finally, the Nasdaq managed to erase the entire decline in the Institute for Supply Management (ISM) manufacturing PMI as the market’s “growth concerns” faded. The first catalyst was the healthy US jobless claims on August 8.D In August, this eased concerns about a deteriorating labor market caused by a weak nonfarm payrolls report.
Last week we had better jobless claims numbers and a great retail sales report which added to the bullish momentum. It is clear that the market is now focused on growth. This week we will see two major events.
The first event will be on Thursday when we get the preliminary US PMI data for August, which will test the hypothesis that July’s data was negatively affected by Hurricane Beryl. The second event will be Fed Chairman Powell’s speech at the Jackson Hole Symposium where he is likely to pre-commit to a September rate cut.
Nasdaq Technical Analysis – Daily Time Frame
On the daily chart, we can see that the Nasdaq broke the major trend line and extended gains to the key 19712 level. Here we can expect sellers to step in with a defined risk above the level to position themselves for a drop to the major trend line around the 18000 level. On the other hand, buyers will want to see the price rise higher to increase bullish bets to new highs.
Nasdaq Technical Analysis – 4-Hour Time Frame
On the 4-hour chart, we can see that there is a rising trend line that defines the current bullish momentum. If we get a bigger pullback, buyers are likely to rely on the trend line as they will also find the 38.2% Fibonacci retracement level to converge. On the other hand, sellers will want to see the price drop to increase bearish bets towards the 18,000 level.
Nasdaq Technical Analysis – 1 Hour Time Frame
On the 1-hour chart, we can see that we have a steeper secondary uptrend line which has acted as support for buyers as they continue to rely on it to push higher highs. This is where we are likely to see them step in again with risks defined below the higher low at 19,445 to set up a break above major resistance.
On the other hand, sellers will want to see the price break the trend line and the 19445 level to increase bearish bets on the other trend line around the 19000 level. The red lines mark the average daily range for the day.
Upcoming incentives
Today, we will hear from Federal Reserve Chairman Wall Street. On Thursday, we will hear from U.S. jobless claims and U.S. PMI. On Friday, we will conclude our conversation with Fed Chairman Powell’s speech at the Jackson Hole Symposium.