Another “Buy The Dip” week in the markets last week as we once again saw US equities trading near their All Time Highs to close out Friday. NASDAQ, the Dow Jones and S&P500 all closed at -0.21%, -1.06% and -0.53% respectively.
Last week looked to be the beginning of a retracement in the equities market, before investors bought everything up on Friday. Last week started off on a dull note in the markets with various countries still being affected by the Delta variant despite millions being vaccinated. Last week’s FOMC Meeting Minutes signaled that a majority of Fed members support an idea to scale back the $120 billion per month asset purchasing by the end of this year although economic data shows signs of slowing economic recovery. The current theme within the markets seems to be a mixture of tapering, economic growth, Delta variant concerns as well as a market that is overstretched after months of outperformance.
This week, investors will be eyeing the Jackson Hole symposium on Friday for clues on the Fed’s move with regards to tapering. Jerome Powell will also be in focus as he is expected to officially announce the tapering of asset purchases at this meeting. If Powell continues to pushes back on tapering talks, then we could see stocks getting a bit of a boost and correcting this past week’s losses. Investors will also be eyeing GDP as well as Jobless Claims data releasing on Thursday.
Looking at NASDAQ technically, we can see we had that bearish momentum at the start of last week before investors bought the dip up. We had that bullish reversal around the 61.8 Fib retracement level and price has simply climbed from there, currently trading near All Time Highs at the time of writing. Should price continue in this fashion, the first area of potential resistance it will come into is the prior All Time High. Breaching this level opens up room for a move even higher into the $15 350 region according to our Fib tool. This will all depend on the fundamental backdrop of this week with the Jackson Hole symposium as well as other risk events.
Similarly on the Dow Jones, we see that same reversal to the upside around the ascending trendline stemming from Daily lows as well the 50% Fib retracement level. At the time of writing, price is approaching those All Time Highs around that $35 500 region with it currently looming as potential resistance. Should price manage to clear, we would look to see continued bullish momentum targeting 36k. Again, this will all be dependent on what this week’s fundamental backdrop looks like.
As always traders, exercise healthy risk management and we hope you have a fantastic trading week ahead. For more updates like the one above, subscribe to our blog for instant updates to your mail or join our Telegram Trading Floor via our website at http://www.aspirefx.co.za.