The Nasdaq 100 (NDX) was torn between bullish and bearish following Fed Chair Jerome Powell’s remarks at yesterday’s Jackson Hole Symposium. The equities market wasn’t alone in this volatility rush as gold (XAU/USD), the US Treasuries, and the US dollar (DXY) all whipsawed after the speech.
The Federal Reserve’s decision to switch their inflation policy from a fixed 2% target to an average could open the doors to inflation numbers above 2% for extended periods. That said, lower interest rates may also remain as inflation rises.
The aim of this is to create room for unemployment to decrease while inflation rises. Meanwhile, extended periods of low-interest rates may continue to bolster the risk appetite in the US equities market. However, some analysts worry that this could be negatively consequential in the long run.
The NDX has grown by about 35% in the year-to-date despite the pandemic and the upcoming US Presidential election. Given that the Fed is firmly behind them, many stocks—especially NASDAQ’s basket of high rising tech stocks—have scaled record-breaking hurdles and some analysts have cautioned that this growth is not organic but artificially stimulated by the central bank.
With its recent price action, it can be seen that Nasdaq 100 bulls are quite comfortable and will continue steering the prospects for the index in the near-term while bears remain in the ‘back seat.’
NDX – Hourly Chart
Nasdaq 100 (NDX) Value Forecast — August 28
NDX Major Bias:Bullish
Supply Levels: 12000, 12150, and 12350.
Demand Levels:11890, 11650, and 11500.
The NDX has displayed exceptional performance in the past few days, clearing most of our main resistance levels effortlessly. Just yesterday, the index tested the long-awaited 12000 area and the top of our ascending channel. However, it was immediately met with a fresh supply, which sent it on a modest correction to the 11890 support.
That said, a retest of the strong resistance is underway and failure to clear this level could send it on a full correction to the 11650 where a confluence of indicators lay (strong support zone and 50 SMA). This level will likely facilitate a strong bounce for the index to clear the hurdle if it comes to that.
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