Basic overview
The US CPI yesterday's report was in line with expectations and sealed the 25 bps cut next week with the probabilities around 97%. The Nasdaq rallied strongly on fears of potentially higher-than-expected data and hedgers entered the CPI release without bounds.
Overall, the market remains largely unchanged around three rate cuts by the end of 2025. We will likely need stronger evidence of re-accelerating inflation to price in the remaining rate cuts . For now, the conditions for further upside remain in place.
In fact, 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 will be inflation and the Fed's response function. 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 sharp correction in the stock market on an expected economic slowdown. For now, we are still in a “buy the dip” environment.
Nasdaq Technical Analysis – Daily Schedule
Nasdaq Daily
On the daily chart, we see that the Nasdaq extended its rally to a new all-time high after the US CPI release. From a risk management perspective, buyers will have a much better risk to reward position around the main line of motion. On the other hand, the sellers will want to see the price break lower to target a drop to the 20381 level.
Nasdaq Technical Analysis – 4 Hour Timeframe
Nasdaq 4 hours
On the 4 hour chart, we can see that we have a small trendline defining the current bullish trend in this timeframe. If we get a pullback into it, we can expect the buyers to continue the move to position for new highs, while the sellers will look for a break lower to position for a break below major trend.
Nasdaq Technical Analysis – 1 Hour Timeframe
Nasdaq 1 hour
On the 1 hour chart, we have the recent high which could serve as support if the support trend remains strong. It is likely that the buyers will step in around the support to target new highs, while the sellers will look for a lower break to set them up to fall into the trend line. Today's hot US PPI could provide a pullback, and soft figures should prompt another rally. The red lines define the average daily range for today.
Catalysts to come
Today we get the latest US jobless claims numbers and the US PPI report.
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