Nasdaq is approaching new record highs amid supportive drivers. US data in focus now.

FUNDAMENTAL
OVERVIEW

The Nasdaq is approaching
new all-time highs as risk sentiment remains positive amid lower geopolitical tensions,
a neutral Fed and improving US growth. These drivers are supportive for the
stock market and will likely take us to new record highs unless we get a hawkish
repricing in the next couple of weeks.

In fact, we are now entering
a pivotal month when we will get new tier one data including the US NFP and CPI
reports. What could weigh on the market in the short-term is a hawkish
repricing in interest rate expectations caused by strong data.

Traders are pricing in 48
bps of easing by year-end compared to 25 bps projected by the Fed. In case we
get strong data, the market will need to reprice that at least to get in line
with the Fed’s view. If the data continues to surprise to the upside or comes
out too hot, then we could see all the rate cut bets getting quickly trimmed.

In the bigger picture, as
long as inflation continues to slowly head towards target, the stock market
should remain supported amid the Fed’s dovish reaction function. A quick deterioration
in the labour market though could trigger growth fears and lead to a
correction.

NASDAQ TECHNICAL
ANALYSIS – DAILY TIMEFRAME

On
the daily chart, we can see that
the Nasdaq is approaching the all-time highs.
That’s where we can expect the sellers to step in with a defined risk above the
highs to position for a drop into the major trendline. The buyers, on the other
hand, will look for a break higher to increase the bullish bets into new record
highs.

NASDAQ TECHNICAL
ANALYSIS – 4 HOUR TIMEFRAME

On
the 4 hour chart, we can see that
we have a minor upward trendline defining the bullish momentum on this timeframe.
From a risk management perspective, the buyers will have a better risk to
reward setup around the trendline to keep pushing into new highs, while the
sellers will need a break lower to increase the bearish bets into the 25,000
level next.

NASDAQ TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAME

On the 1 hour chart, we can
see that we have a minor counter-trendline acting as resistance. The sellers
will likely continue to lean on it to target a pullback into the major upward
trendline, while the buyers will want to see a breakout to increase the bullish
bets into new record highs. The red lines define the average daily range for
today.

UPCOMING CATALYSTS

Today we get the latest US Jobless Claims figures. Tomorrow, we conclude
the week with the US PPI report.