The US equities market enjoyed a slight rebound last week on the back of positive economic data pointing towards a recovery within the US economy. Investors will keep an eye on this week’s fundamental docket as inflation continues to weigh on market sentiment.
Friday saw The flash Markit US Composite PMI Index coming in at 68.1, beating our last month’s reading of 63.5. The Dow Jones was mainly affected by this as investors are looking to rotate out of growth stocks into value stocks. It is worth noting that this is a record high for the PMI gauge which hints towards a full-blown recovery for the US economy as this is boosting reflation optimism in the market.
This week’s most influential risk event comes in the form of US Core PCE Price Index on Friday as well as US GDP readings on Thursday as investors continue to gauge on the direction of the US economy as well as the Fed’s stance towards potential tapering. Friday also brings us the weekly Jobless Claims data as we look to see if the employment market remains at steady post-pandemic levels.
Having a look at NASDAQ on the daily timeframe, we can see that price managed to find a form of dynamic support around our ascending trendline to create the low of last week before taking price higher. At the time of writing, price is currently trading just below the Prior Weekly High as well as a zone of resistance stemming from early February.
Dropping down to the 4 Hour timeframe, the first thing that is noteworthy is the fact that we have had a bullish break of structure and a perfect retracement around the Aspire Profit Pocket before price made a move to the upside. We’ve also had the break and retest of the 4H descending trendline. Should NASDAQ continue to follow bullish structure, we will simply wait for the next Higher Low to take price higher potentially into the $13 700 region before seeing another pullback. Any closures below the Prior Weekly Low would invalidate my long bias.
Moving onto the Dow, we can see last week’s low was created in the form of a 78.6 Fibonacci retracement which was bolstered on the back of positive economic data for the US coming into the end of last week. Price struggled to clear the Prior Weekly High which gives me a sign of potential fading bullish momentum. A break and clear above the previous week’s high would confirm a further move to the upside i.e creating a Higher High, but at the time of writing, it will be treated as a potential level of resistance.
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