FUNDAMENTAL
OVERVIEW
The Nasdaq opened lower
yesterday after the US and Israel launched a coordinated attack over the
weekend against various Iran’s targets that included key officials and military
facilities. Their operation managed to kill Iran’s Supreme Leader Khamenei and
many other regime officials.
Iran responded with broad
attacks against Israel and US bases in various Gulf States like Jordan, Kuwait, Bahrain, Qatar, Iraq, Saudi Arabia, and the United
Arab Emirates aimed at building pressure to end the war.
The strategy seemed like
working as Bloomberg reported that UAE and Qatar were lobbying allies to
persuade Trump to end Iran war soon. That and other de-escalation attempts
helped the Nasdaq to erase losses, and the index eventually finished the day
higher.
Unfortunately, late yesterday
the advisor to the commander of IRGC said that the Strait of Hormuz was
basically closed and they will target any ship that attempts to pass through.
The traffic in the Strait has indeed fallen dramatically with minimal activity.
The longer this war drags on, the worse the consequences will be for the global
economy.
The stock market is at risk
of a huge selloff if things deteriorate further as growth expectations would turn
negative and the Fed would not be able to act fast amid the inflationary
pressures from higher energy prices. The bias for now remains neutral to
bearish, so the bulls will need to wait for clear de-escalation before piling back
in.
NASDAQ TECHNICAL
ANALYSIS – DAILY TIMEFRAME
On
the daily chart, we can see the
Nasdaq has been trading in a wide range
since October of last year. Such long consolidations generally lead to big
trending moves once the price breaks out. Until then, the market participants
will continue to play the range.
NASDAQ TECHNICAL
ANALYSIS – 4 HOUR TIMEFRAME
On
the 4 hour chart, we have a
tighter range between the 24,173 support and the 25,466 resistance. Again, market
participants will continue to play the range by selling at resistance and
buying at support until we get a breakout.
NASDAQ TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we can
see the price is trading at the lower bound of the average daily range for today. In such instances, the
price generally consolidates or pulls back before the next move. If we get a
pullback into the downward trendline, we can expect the sellers to lean on it to
keep pushing into new lows, while the buyers will look for a break higher to increase
the bullish bets into the 25,466 resistance next.
UPCOMING CATALYSTS
Tomorrow we have the US ADP and the US ISM Services PMI. On Thursday, we get the
latest US Jobless Claims figures. On Friday, we conclude the week with the US
NFP report. The data might not matter much this week amid the US-Iran conflict.
This article was written by Giuseppe Dellamotta at investinglive.com.
