After weeks and weeks of bullish momentum, we have finally seen fresh session lows printed on the NASDAQ with an 11% drop from the All Time Highs at the time of writing. Is this the stock market reset many have anticipated because of rising yields or is this simply the time to buy the dip with President Biden’s stimulus package weeks away from being implemented?
As we can see above, we’ve seen about a 7% decline in the NASDAQ since creating the right shoulder formation sending price into a level of potential support created by the highs we saw in September 2020.
This sell off also coincided with a rise in the 10 Year Treasury Yields after Fed Chairman Jerome Powell had no success in calming fears about rising volatility in the bond market in a speech at the Wall Street Journal Summit last night. As we can see below, we’ve seen the 10 Year Yield rise into 1.547% at the time of writing. It will be interesting to see if the rise in bond yields is enough of a catalyst to continue sending tech stocks lower.
With the NASDAQ currently sitting at an inflection zone, it will be interesting to see how US Unemployment Rate, NFP and the Federal Budget will affect the stock market and yields going forward. Looking below, we can see if our long term trendline cannot manage to hold as dynamic support going forward, we still have an immediate potential support zone around the $12 000 region as well as the 200 day Exponential Moving Average just below that.
Always remember to exercise risk and money management when looking to execute positions amidst all of these fundamentals coming up. We hope everyone had a great trading week. For more articles like the one above, subscribe to our blog for updates delivered directly to your email so you never miss the market moves.