U.S Equities once again trading at new All Time Highs after a hawkish Jackson Hole Symposium. NASDAQ and the Dow Jones both closed the week out at +2.2% and +0.97% respectively.
The main culprit of last week’s bullish action looks to be the approval of the Pfizer vaccine by the FDA. The Corona virus continues to spread in various parts of the world and with the ongoing talk about tapering asset purchases, this could be the driver of a reduction in liquidity in the market. The Central Bank is likely to scale back their bond buying program by the end of this year, but remains patient to implement interest rate hikes. Last week saw the DXY pull back alongside the 10 Year Treasury Yields, showing the market is well prepared for tapering.
All eyes were on last week’s Jackson Hole Symposium which delivered a hawkish-biased message from Jerome Powell. The essence of his speech was that the central bank will start tapering the $120 million per month bond buying program. He also emphasized that interest rate hikes will not follow after tapering. All of this equates to an ultra-low interest rate environment here to stay, and this in turn benefits Technology stocks. All in all, the speech soothed some market fear and boosted market confidence.
In terms of risk events this week, we have quite a full calendar with a few high risk events scheduled to take place. Investors will mainly be eyeing NFP data on Friday as well as the Unemployment Rate to continue tracking the rate of job recovery as well as overall market recovery. Consumer Confidence and ISM Manufacturing on Tuesday and Wednesday respectively, will also bring liquidity to the equities market.
Looking at NAS from a technical aspect, new all time highs have been achieved. Last week’s fundamental backdrop was enough to propel NAS above previous consolidation with price looking to target the $15 500 level before profit taking occurs on an institutional level. The fundamental backdrop of NAS is bullish, “Buy The Dip” is going to be adopted once again. For longer term traders, the first levels of immediate support comes in around the $15 100 region as well the psychological level of $15 000 where price could once again turn to find new highs.
The Dow rejected the $35 500 level twice last week with it currently trading around that region at the time of writing. Should $35 500 hold as resistance in coming sessions, we could see sustained bearish momentum on the Dow until around the $35k region where we could see the ascending trendline come into play once again. Should $35 500 be broken, we can anticipate price to continue climbing potentially into $36 000 according to the -0.27 Fib Extension level.
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