NASDAQ Market Analysis: Today’s CPI Reading

The NASDAQ increased in value for a fourth consecutive day as investors anticipate a rate cut in September. On Wednesday, the index rose by 1.05%, but the continuation of this bullish trend will hinge on today’s inflation reading. Investors are expecting a decrease in inflation; however, if this expectation is not met, it could exert downward pressure. Conversely, if inflation drops to 3.1% or lower, shareholders are less likely to sell shares ahead of earnings season, potentially sustaining the bullish trend.

The prospect of a rate cut in September has gained traction due to rising unemployment and a shift in the Federal Reserve’s tone. Earlier this week, the Fed Chairman noted signs of weakening in the employment sector, while yesterday, the Fed Governor indicated that inflation would reach the target without a significant further increase in the unemployment rate. Lower interest rates support the economy but also make bonds and the US Dollar less attractive.

Only 25% of the NASDAQ’s 100 stocks declined on Wednesday, applying minimal pressure. The bullish movement was driven largely by the top 8 most influential stocks, which all rose in value, comprising 49.08% of the entire index. The only stocks applying minor pressure were Netflix, which fell by 1.18%, and Intuit, down by 2.70%. These two stocks hold a combined weight of 3.08%.

One of the significant supporters of the NASDAQ in 2023 and 2024 has been NVIDIA. Leading analysts note that the company’s quarterly report is scheduled slightly later than its main competitors, potentially providing an advantage and an opportunity to improve performance. KeyBanc Capital Markets raised NVIDIA’s target price from $130 to $180, citing higher-than-expected demand for GB200 graphics processors, especially the more expensive NVL72 configuration, which is gaining interest over the previously popular NVL36. Wolfe Research LLC also adjusted its price target from $125 to $150.

Currently, the price is trading within a symmetrical triangle, indicating a lower high but a higher low. Volatility is likely to remain minimal until the US Consumer Price Index (CPI) release. If the CPI meets expectations and the price increases, traders should be cautious of potential profit-taking and price retracement. In the medium to long term, the price remains above the 75-Period EMA and 100-Period SMA, indicating that buyers are controlling the market. Based on price action, buy signals are likely to materialize again if the price rises above $20,697.40.

Employment Data Eases Concerns and Pushes NASDAQ Close to an All-Time High!

The NASDAQ has climbed 1.40% this week as market risk appetite improves and institutions position themselves for the upcoming earnings season. The NASDAQ has now formed a second higher high and a third higher low, prompting technical analysts to suggest a potential bullish trend. Economists also predict strong performance for the NASDAQ in the second half of the year.

Bulls entered the market quickly during yesterday’s trading session following positive employment data. Analysts had expected the JOLTS Job Openings to fall to its lowest level since the COVID lockdowns, but the data showed 180,000 more vacancies than anticipated. Investors reacted positively, interpreting the data as a sign that the employment sector is balanced—strong but not so strong as to significantly drive up salaries and inflation.

Federal Reserve Chairman Jerome Powell added to the positive sentiment by noting that recent data suggests a return to a disinflationary path, despite persistently high inflation reports earlier in 2024. However, economists warn that rising oil prices, which increased by 8.40% in June 2024, could make inflation stickier if prices hover around $85 per barrel.

Even with potential inflation concerns, investors are starting to focus on the upcoming earnings season, set to begin on Friday, July 12th, with momentum picking up on the 17th. On Tuesday, 75% of NASDAQ stocks and 83% of its most influential stocks rose in value.

Currently, the NASDAQ is showing buy signals, trading comfortably above the 75-bar EMA and the Volume Weighted Average Price. Oscillators also indicate buyer control, though technical analysts are closely monitoring for sustained momentum. Key breakout levels are at $20,036.03 and $20,045.64, with the NASDAQ’s all-time high at $20,128.31.

French CAC: Analysis, Targets and Price Drivers!

  • Projections indicate that France’s Far Right Party will lead the first round of parliamentary elections.
  • The Euro is the day’s best-performing currency, increasing in value by more than 0.40%.
  • European indices soar! The Euro Stoxx 50 rises 1.85% and the DAX 1.00%.
  • Investors are focusing on today’s German inflation data, with analysts expecting the Consumer Price Index to rise by 0.2%.

Following an exceptionally high voter turnout, the National Rally is leading with 34% of the vote. The left-wing New Popular Front is in second place with 28%, and President Emmanuel Macron’s Ensemble Alliance has dropped to a disappointing third place with 20%, according to initial estimates. Although the National Rally seems poised to secure the most seats, France could be facing a hung parliament and increased political uncertainty. Even so, technical analysis signals a possible correction upwards, and the market is showing a clear “risk-on” sentiment. The higher risk appetite is due to the far-right failing to win a majority. Bottom fishing refers to investors buying at the lowest price!

By the market close on Friday, the French CAC was near its lowest level for 2024. Since Sunday’s elections, all European indices have risen, with the French CAC trading up 2.65%. Investors have bought the dip, triggering a large price gap and a significantly higher price. Nonetheless, the price remains 7.00% lower than the index’s all-time high. The price is being influenced by three major factors: upcoming earnings data, higher stock appetite, and the French elections.

However, the outcome will depend on the political outcome and if indeed the French National Party fail to win a majority. In addition to this, the outcome will also depend on if the New Popular Front and President Emmanuel Macron can come to an agreement to join forces. If this is not possible, the political uncertainty can trigger another decline. Investors which have already entered into a buy position will now be hoping for political calm and for today’s German CPI to read lower than expectations.

The risk-on sentiment can be seen across the global stock market. All European and US indices are increasing on Monday. The Euro Stoxx 50 has risen 1.85%, the DAX 1.00%, the S&P 500 0.35%, and the NASDAQ 0.40%. Some Asian stocks are also continuing to rise. Lastly, the VIX index trades 1.59% lower, indicating a higher risk appetite.

In terms of technical analysis, the CAC40 is attempting to establish itself above the 75-Bar EMA and above 50.00 on the RSI. On smaller timeframes, the momentum is forming bullish crossovers, further indicating an increase. The only concern for investors is the resistance level at 7,729.48, which pressured the index last week. If the price forms a breakout above this level, the index will likely see buy signals strengthen. If the price retraces to 7,614.55, traders have the opportunity to trade the upcoming breakout. However, if the price falls below this level, the buy signal will no longer be valid for the time being.

The NASDAQ Struggles to Maintain Short-Term Gains!

– Oil prices are set to rise for the third consecutive week due to escalations in the Middle East.
– The VIX drops by more than 4.11%, indicating increased risk appetite in the stock market. Investors are now focusing on employment data and earnings reports.
– Stocks surge as the latest Core PCE Price Index hits its lowest level in six months.
– The Nikkei225 and NASDAQ are the best-performing indices this week.

USA100 – The NASDAQ Struggles to Maintain Short-Term Gains!

The NASDAQ reached its highest price in over a week as the latest inflation data suggests lower interest rates. The Core PCE Price Index dropped from 0.2% to 0.1%, marking its lowest level in six months. This brings the annual rate down to 2.6%, slightly above the Fed’s 2.00% target.

As a result, the likelihood of an interest rate adjustment next month rises to 10.3%, and to 64.00% for September. This is generally positive for the stock market and continues to support higher risk appetite. The improvement in investor sentiment is also reflected in the VIX Index, which fell more than 4.11% and is approaching previous lows. Additionally, the US 10-Year Bond Yield declined by 15 points, providing further support for the technology sector.

However, investors have three main concerns. First, if oil prices continue to rise, it could trigger panic and more persistent inflation. Second, escalations in the Middle East between Lebanon and Israel could lead to the direct involvement of Iran and Turkey in the conflict, causing supply issues. For now, this situation is keeping investors on edge but not in a panic.

Lastly, investors need to be cautious of the strong decline that followed the rapid price increase after the PCE announcement. Due to bearish volatility, the price is forming a lower low. The key question is whether the price will break the resistance level at $19,871.80. Nonetheless, the two-hour chart indicates a longer-term bullish trend, but most investors would prefer to see all three US indices rise before speculating on upward price movement.

Among the 25 stocks that hold more than a 1.00% weight, only 32% are trading lower. This does not indicate a significant decline, but investors will keep monitoring any changes.

Will The SNP500 Break The Recent Price Range?

– US GDP increased by 1.4%, matching analysts’ expectations. The USD Index fell 0.17%, making it the worst-performing currency of the day.

– US Weekly Unemployment Claims remain high but are consistent with previous expectations.

– Durable Goods Orders grew by 0.1%, providing support for the US Stock Market.

USA500

The US Stock Market rose after the release of the latest GDP, Durable Goods, and Unemployment Claims data. However, the medium-term outlook still suggests a sideways price movement. Investors are looking to gather more data ahead of the upcoming earnings season to strategically position their portfolios.

Key focus areas for investors include tomorrow’s Core PCE Price Index and the latest NFP Employment Change. Analysts predict the Core PCE Price Index will fall from 2.7% to 2.6%. If it doesn’t decline, the stock market may face pressure due to the lack of data indicating a rate adjustment. Currently, the market is pricing in a rate cut for September 2024. Many analysts believe the USA500 could be overpriced if this cut does not materialize.

While the S&P 500 shows signs of bullish movement, there are indications of a wide price range. For instance, 52% of the top 25 most influential stocks are trading lower in pre-market hours, and the index remains below a recurring resistance level.

Meanwhile, the actions of the US Federal Reserve remain uncertain. Despite a slight decrease in the consumer price index from 3.4% to 3.3% in May, officials are still considering maintaining tight monetary policy for an extended period and possibly increasing borrowing costs if necessary. Upcoming economic data, including today’s GDP and Friday’s May personal consumption expenditures price index, could influence the Fed’s decisions.

Today’s economic data aligns with a bullish short-term outlook, indicating stability, economic growth, and no upward pressure on inflation. Most assets are increasing in value during the European Cash Open, signaling strong investor sentiment and higher risk appetite. Additionally, the VIX, a well-known sentiment index, is trading lower, which typically supports the stock market.

The main concern for investors is the resistance level at $5,492.10, yet the price continues to trade above the 75-Bar EMA, indicating a short-term upward trend.

Market Analysis – A Strengthening Dollar Pressures Gold!

– The best-performing currency of the day is the US Dollar, which has increased by 0.34% and continues to pressure gold.

– The US Dollar gains support from recent US economic data, leading investors to question if markets are pricing in a higher Core PCE Price Index.

– Gold prices have fallen to a long-term support level of $2,291.50.

– The market exhibits a strong risk-on sentiment, with global stocks rising and most safe-haven assets declining.

Gold prices are facing pressure due to increased risk appetite and a strengthening US Dollar. However, technical analysts note that the $2,291.50 support level has held firm on six occasions over the past three months. Despite trading near this support, traders seek a trend change signal. According to analysts, the higher the possibility of a Trump becoming president, the higher the probability of China continuing to de-dollarize and back their currency with Gold reserves.

Currently, gold is below key indicators like the 75-Bar EMA and 100-Bar SMA. If the price rises above $2,318.05, it could indicate a correction up to $2,326.83, while a drop below $2,307.76 without a new high would trigger a sell signal.

Long-term, gold prices may remain high due to geopolitical risks, including conflicts in Ukraine and the Middle East and potential US-China tensions. A Bank of America survey found that 29% of portfolio managers view these risks as crucial for the global economy. In response, central banks are increasing their reserves, with the World Gold Council reporting a 290.0-ton increase in the first quarter, continuing last year’s positive trend.

Additionally, higher silver prices, which correlate with gold, support the metal’s value. Economic data driving the Dollar’s strength, like the recent higher-than-expected Consumer Confidence Index, influences gold’s performance. Investors are closely watching upcoming US New Home Sales, Pending Home Sales, and the Core PCE Price Index. For gold to rise, weaker economic data is needed to pressure the Dollar and shift investor focus to gold.

NASDAQ Analysis: Will NVIDIA Drive A Correction?

As the US trading session closed, the NASDAQ reached a key support level at $19,490.42, last seen on June 13-14. Over the past five days, the index experienced its strongest bearish impulse wave since May, forming a full correction. However, since hitting this support level, the price has quickly rebounded, and this morning, the NASDAQ trades 0.50% higher. The question remains: will the price continue to rise when the US session opens?

The recent decline is mainly attributed to the drop in NVIDIA stocks and other influential stocks. NVIDIA fell by 6.68%, and 72% of the most influential stocks depreciated. Analysts suggest this was due to insider sales, geopolitical tensions, and the expiry of options. Despite this, many economists believe that as long as earnings remain strong and the economy avoids a recession, buyers will re-enter at a lower price. The key question is whether this support level will hold.

Globally, the stock market shows signs of pressure, especially in the EU and UK markets. The DAX is down 1.07%, the French CAC 0.69%, the Euro Stoxx 50 0.52%, and the FTSE100 0.24%. In contrast, the main US indices are correcting upwards, with 70% of NASDAQ’s most influential stocks trading higher in pre-trading hours. If this trend continues after the market opens, a potential correction could be on the horizon.

In this morning’s Asian and European sessions, NVIDIA is the best-performing stock, up 2.33%, while Ross Stores Inc is the worst-performing, though it only holds a weight of 0.34%. Investors are now awaiting the CB Consumer Confidence and Richmond Manufacturing Index reports. If these data points exceed expectations, they could support the stock market, which has been impacted by a lower risk appetite.

For the NASDAQ to generate buy signals, the price must stay above $19,622.62 in the near term. For a longer-term rise, investors will look for the price to exceed the 75-Bar EMA and 100-Bar SMA on the 2-hour chart. This has created a range between $19,712.53 and $19,782.35. It is also likely within this range that the RSI will rise above the 50.00 mark (currently at 39.53).

German & French PMI Indicate Another Economic Decline Pressuring The DAX

The German DAX declines 0.34% as investors react to the latest Purchasing Managers’ Indexes. The German Services PMI fell from 53.9 to 53.5, below expectations, while the Manufacturing PMI dropped to 43.4, missing analysts’ forecasts by 3.0 points. Investors are particularly concerned about the Manufacturing data, which is below 50.00, indicating a risk of economic contraction.

The Purchasing Managers’ Index (PMI) is important because it serves as a key economic indicator that provides insight into the health of the manufacturing and services sectors. Here are several reasons why the PMI is crucial:

  • Economic Health Indicator: The PMI is a reliable gauge of economic activity. A PMI above 50 indicates expansion, while a PMI below 50 indicates contraction. This makes it an essential tool for assessing the overall economic health.
  • Early Economic Signal: PMI data is released monthly, providing timely information that can give an early indication of economic trends before other major economic reports are published.

French PMI data also came in lower than expected and below the previous month’s figures, further dampening risk appetite and negatively affecting the stock market. However, this data could prompt a second-rate adjustment in 2024. If US and UK PMI data also decline, it may lead to a broader risk-off sentiment, potentially triggering continued bearish momentum and a more dovish stance than other central banks. The UK PMI data also reads lower than expectations.

The regulator’s governing board confirmed that the decision to cut interest rates earlier this month was made to test the monetary system. Simultaneously, the parameters of the PEPP bond purchase program will remain unchanged until the end of 2024, with the ECB continuing to reduce its portfolio by an average of 7.5 billion euros per month.

From a technical analysis perspective, the price is trading below the 75-EMA and the 100-Bar SMA, indicating that sellers are controlling the market despite recent impulse waves. The Moving Averages have formed a bearish crossover, and the MACD is below the signal line. If the price falls below 18,210.30, sell signals could potentially intensify. The index has two support levels close to the current price. The first at 18,062.09 and the second at 17,976.12. Indicators point towards a potential decline, but investors should be cautious of these levels. Lastly, technical analysts also note that price action can change as we enter the US Trading Session, and the US PMI is made public.

Market Analysis: Dow Jones

The Dow Jones is the only index that hasn’t experienced a significant rise in value. For instance, last week the NASDAQ gained 3.77%, and the S&P 500 increased by 1.70%. This is because the Dow lacks exposure to the technology sector and growth stocks, being primarily composed of defensive and high dividend-yielding stocks. Of the top 10 most influential stocks in the Dow Jones, 5 rose in value while 5 declined, explaining the lack of growth.

Nevertheless, investors are considering whether the index is undervalued. Last week’s economic data, pointing towards lower inflation and weaker employment, is favorable for monetary policy. The US inflation rate fell to 3.3%, core inflation to 3.4%, and producer inflation to 2.24%. These readings were positive for all stocks, supporting bullish movements already seen in the NASDAQ and S&P 500. Additionally, higher-than-expected unemployment claims for the third consecutive week could indicate a need for defensive and high dividend-yielding stocks.

European stocks are trading higher while oil prices are lower, which is positive for stocks. Bond yields are higher on Monday but are retracing as the European Cash Open approaches. If yields don’t rise further, this data could signal a potential upward movement for the Dow Jones. Investors are also watching the Empire State Manufacturing Index, as a higher-than-expected index could support Dow stocks.

Therefore, the Dow Jones may be trading below its value, especially if interest rate cuts remain likely. Although the index might continue to lag behind the S&P 500 and NASDAQ, it is trading 3.75% below its 2024 highs and 1.50% below June’s highs. Investors are closely watching for indications of upward price movement, which could signal a potential rise to $38,714 in the short term. Currently, the price is forming a bullish crossover on both the 2-hour and 5-minute charts, with buy signals likely at $38,620.05 and $38,632.05 according to Fibonacci levels.

Producer Inflation Indicates A Longer Term Decline In Inflation!

The NASDAQ experienced a milder retracement compared to the S&P 500 and Dow Jones during yesterday’s bullish trend, indicating strong investor confidence in the technology market. Analysts and institutions have raised their target prices and intrinsic values of stocks in response to recent inflation data.

Consumer inflation has dropped to 3.4%, while producer inflation has hit a record low. Producer inflation is now at 2.2% and core producer inflation at 2.3%. With these lower inflation readings, over 60% of traders now believe the Federal Reserve will cut rates in September 2024, up from less than 37% previously. This combination of lower inflation and a higher likelihood of rate cuts is seen as positive for the NASDAQ.

However, some investors are reacting negatively to higher-than-expected unemployment claims, which have risen to a 10-month high, surpassing the first quarter’s average.

The Federal Reserve’s decision to reduce the maximum volume of government bonds for reinvestment to $25 billion per month, down from $60 billion, and to maintain the limit for mortgage-backed securities at $35 billion, suggests a slight tightening in monetary policy aimed at further controlling inflation.

The 10-Year US Bond Yield has decreased by 0.026 points, which also supports the stock market. Investors will closely watch the performance of key stocks like Apple, Microsoft, NVIDIA, Alphabet, and Amazon when the US market opens.

Technical analysis indicates that buyers are in control of the price. Additionally, the price has formed a bullish crossover and remains above sentiment indicators. The VIX is trading 0.84% lower, and the High-Low Index is rising, both pointing to a “risk-on” sentiment. According to Fibonacci analysis, buy signals will strengthen if the price crosses above the $19,661.76 level.