Market Outlook 29/03/2021

The past two months in the equities market has shown a clear divergence between the tech-heavy NASDAQ and the blue chip Dow Jones. We’ve seen pandemic winners such as information technology being swapped out for cyclical names such as energy, material and the financial sector. Since the beginning of February 2021, the Dow Jones has gained 8% and the NASDAQ has fallen -3.2%, at the time of writing.

This transition into more stable and lower yielding earners makes sense as we’ve seen the rollout of the Corona Virus vaccine take place, upbeat economic data releases and we’ve also had the passing of President Biden’s $1.9 trillion stimulus package. Overall, this shows signs of the US economy slowly recovering and making its way from digital services back into face-to-face services. 


In terms of Fundamentals for the week going forward, all eyes will be watching for Friday’s NFP results to gauge on where the labour market could potentially be headed its result for the Fed’s interest rate path. Wednesday brings us the ADP NFP results as well as Pending Home Sales. Then on Thursday, an eye should be kept out for Initial Jobless Claims as well as the ISM Manufacturing PMI results. It should be important to note that with March coming to an end this week, the markets could be in for a rough time with Quarterly results being filled in. 


Technically, NASDAQ is not out of the water yet with a clear trend direction. A note should kept how the Monthly candle closes on Wednesday with the previous two months rejecting the highs.


For the week going forward, price is still showing bearish momentum on the 4H timeframe. Plotting our Fibonacci tool from Lower High to Lower Low, it will be a waiting game as we look for potential signs of reversal around one of our retracement zones as well as the descending trendline and the psychological level of $13 000 to act as resistance. A break and clear of $13 200 would invalidate any bearish setups for now. 


Last week Thursday and Friday brought the bulls back into play on the Dow as we saw price momentarily dip into the Previous All Time High before rocketing back into the highs. Technically for the week going forward, it would be interesting to see if price manages to break the prior weekly high and new ATHs are on the cards or if the current ATH maintains and we  see a Lower High formed. Should the latter of the two scenarios take place, the first levels of potential support are around $32 750 and $32 400 respectively.


As always traders, exercise proper risk management and to stay up to date with all market events, subscribe to our blog for updates directly to your email. Have a great week ahead!

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