Nasdaq Jumps Above Key Resistance
04 August 2022
The tech-heavy Nasdaq index soared 3% on Wednesday, despite several hawkish comments by the US central bankers, and closed at its highest level in three months.
As of writing, it was up another 0.6% ahead of the US session on Thursday, trading near 13,310 USD.
Barrage of hawkish Fed's speakers
According to Fed's Mary Daly, the June DotPlot is still a "fair guide" for the Fed's future decisions. She also stated that "we're not even at the neutral rate yet" and that she is "optimistic about getting inflation down without a major recession."
She came to the conclusion that The Fed "won't move rates down in just a few months," indicating that it is far from making the "flip" that everyone has been waiting for over the last week.
Extremely hawkish Jim Bullard concurred with Neel Kashkari that "rate decreases in 2023 appear like a highly implausible possibility."
Bullard emphasized that the Fed was dedicated to upholding its mandate for price stability, adding that it has "sharply" increased official interest rates and begun the process of quantitative tightening.
Additionally, the services sector Purchasing Managers' Index for the Institute for Supply Management increased from a value of 55.3 in June to 56.7 in July. The headline index was expected to fall to 53.9, according to economists' projections.
Bear market over?
It looks like the bear market from the first half of the year could be over as the index has surged nearly 15% off its lows.
As long as the price trades above the key level of previous lows and highs near 12,920 USD, the immediate outlook seems bullish, likely targeting the 200-day average (purple line) at 14,000 USD.
On the other hand, should the index drop below 12,920 USD again, it might be a strong bearish signal, with a possible decline toward 12,000 USD.