Strong week for technology stocks in the U.S equities market as NASDAQ, the Dow Jones and S&P500 closed the week out at +1.45%, -0.3% and +0.53% respectively.
Last week’s main theme was the release of Non Farm Payrolls (NFP) data points, which left investors disappointed. Only 235 000 jobs were created in August which allowed stocks to pullback slightly before finding one last push to close the week out. Not everything was disappointing as the Unemployment Rate fell from 5.4% to 5.2% which is a slight improvement in the job market. The play on equities is slightly confusing at the moment. Weaker NFP data usually relates to a greater chance of asset tapering deadline being pushed back which means more liquidity for longer i.e positive for stocks. But this can also be seen as a negative as it shows signs of a slowdown in economic recovery. That being said, it seems the only way stocks are going is UP. Even if a pullback is required before we see that.
In terms of risk events this week, investors will be eyeing job openings data on Wednesday following the disappointing NFP results. We also have Jobless Claims and PPI on Thursday and Friday respectively. This should bring some liquidity to the market for this week, as we have Labour Day today in the US at the time of writing.
Looking at NASDAQ from a technical perspective, we are once again at new all time highs at the time of writing. Last week came in the form of a lot of consolidation, but this was most likely due to the fact that investors were waiting for NFP data. Fundamentals look bullish for stocks at the moment, but with the recent bullish momentum we’ve seen on NAS, it is still susceptible to profit taking on a large scale. Should we see said pullback, for the week ahead, immediate support is offered around the $15 600 region followed by the psychological level of $15 500. Should bears manage to pull price back that far, the next point of interest would be the prior week low which could also act as support going forward.
$35 500 remains strong resistance for the Dow. On six previous occasions last week, price failed to breach this level. Should the bears continue to hold this level, we could expect one last pullback on the Dow before seeing further upside into the $36 000 level. Key areas of interest for the week ahead includes the ascending trendline stemming from lows throughout July and August and the psychological level of $35 000. With the current fundamental backdrop for equities, I believe new highs could be seen in the near future.
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.