NASDAQ Composite (.IXIC) close higher as investors bet Fed will lower interest rates

NASDAQ Composite (.IXIC) close higher as investors bet Fed will lower interest rates

NASDAQ Composite (.IXIC) close higher as investors bet Fed will lower interest rates

U.S. stocks closed higher Thursday, recovering from two days of losses, as investors bet that signs this week of a slowing economy will prompt the Federal Reserve to lower interest rates for the third time this year at its late October meeting.

The Institute for Supply Management’s index of the health U.S. services sector came in 52.6%, in September, down from 56.4% in August, suggesting growth is slowing rapidly just two days after ISM’s survey of the U.S. manufacturing sector showed it in outright contraction for the second month in a row.

“Net, net, look out below is what purchasing managers from services industries are shouting at the markets as the fears of recession continue to mount,” MUFG chief economist, Chris Rupkey wrote in a note. “This downturn is starting to spread and that means the tea leaf readers at the Fed are going to be teeing up a third rate cut this year when they next meet again at the end of this month.”

As a result investors bet the chances of another interest rate cut by the Federal Reserve at its late October meeting was now 90.3%, up from 77% on Wednesday and 49% a week ago, based on the CME’s Fedwatch indicator.

In other data, the Labor Department estimated that the number of Americans applying for new jobless benefits rose to a one-month high of 219,000, potentially affected by a three-week-old strike at General Motors Inc., though the number of jobless claims remain near historic lows.

On Wednesday a private-sector employment report from Automatic Data Processing on Wednesday showed that a modest 135,000 jobs were created in September, but investors are now focused on the U.S. Labor Department’s employment report for September due Friday. Economists polled by MarketWatch predict the U.S. added 147,000 new jobs last month, higher than the preliminary 130,000 gain in August.

Investors also were digesting news that the U.S. will impose some $7.5 billion in import duties on goods from the EU, including jetliners, Irish and Scotch whiskies, cheeses and hand tools, starting later this month, after the U.S. won World Trade Organization backing on Wednesday. U.S. – China trade talks are due to resume in mid-October to resolve the two-year old dispute between the world’s two largest economies that has slowed global economic growth.

Technical Indicators

Overall, the bias in prices is: Downwards.

By the way, prices are vulnerable to a correction towards 7,991.60.

The projected upper bound is: 8,162.02.

The projected lower bound is: 7,564.54.

The projected closing price is: 7,863.28.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 22 white candles and 28 black candles for a net of 6 black candles.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 25.8239. This is not an overbought or oversold reading. The last signal was a buy 6 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 42.07. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 85 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -152.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 14 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 7 period(s) ago.

Rex Takasugi – TD Profile

NASDAQ COMPOSITE closed up 87.019 at 7,872.265. Volume was 8% below average (neutral) and Bollinger Bands were 15% narrower than normal.

Open     High      Low     Close     Volume___
7,787.0217,872.2657,700.0027,872.265 518,323,168
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 7,983.70 8,013.44 7,713.91
Volatility: 19 24 22
Volume: 633,377,472 560,810,752 573,591,040

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

NASDAQ COMPOSITE is currently 2.1% above its 200-period moving average and is in an downward trend. Volatility is low as compared to the average volatility over the last 10 periods. Our volume indicators reflect moderate flows of volume out of .IXIC (mildly bearish). Our trend forecasting oscillators are currently bearish on .IXIC and have had this outlook for the last 1 periods.

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