Basic overview
The Nasdaq sold off strongly yesterday after the FOMC decision as the market saw it as more hawkish than expected.
Overall, apart from a few changes, the Fed was in line with market expectations, and the selling may have been an overreaction. There will be a lot of algo-driven noise at big events like that, so be careful about that.
The data is the most important thing now because it will decide what the Fed is going to do. It looks like it will only take one soft CPI report in January to see the market react in a dramatic way and print new all-time highs.
For now, the conditions for further upside remain in place. Indeed, Trump's policies should be a positive driver for growth in 2025 and with the Fed still in an easing cycle, growth should remain positive and may even accelerate as seen recently with the Atlanta indicator Fed GDPNow.
The risk in 2025 is of course inflation and the Fed's response action. Currently, the Fed's response is that a strong economy would warrant a slower pace in the easing cycle, not tightening. That should still be supportive for the stock market.
If the Fed's response action were to change to a possible tightening, that would likely trigger a major stock market correction (if not even a bear market with the stretched valuations) on an economic slowdown that has expectation For now, we are still in a “buy the dip” environment.
Nasdaq Technical Analysis – Daily Schedule
Nasdaq Daily
On the daily chart, we can see that the Nasdaq sold strongly against the key support
area around level 21338 where we also had the main one line of motion for confluence. The buyers entered with a marked risk below the trend line to set up for a rally into a new all-time high. The sellers, on the other hand, want to see the price break lower to increase the bearish bets to the 20381 level next.
Nasdaq Technical Analysis – 4 Hour Timeframe
Nasdaq 4 hours
On the 4 hour chart, we can see more clearly the dip buyers entering the market around the lows with marked risk below the transition line. The sellers need a break below the trendline to keep targeting new levels.
Nasdaq Technical Analysis – 1 Hour Timeframe
Nasdaq 1 hour
On the 1 hour chart, there is not much else we can add here as the buyers will continue to pile up around these levels to position for a new all time high, while ' the sellers will wait for a break below the trend line to increase the bearish level. momentum. The red lines define the average daily range for today.
Catalysts to come
Today we get the latest US jobless claims numbers, and tomorrow we finish the week with US PCE data.
