NASDAQ Composite (.IXIC) rising hopes of Fed rate cut

NASDAQ Composite (.IXIC) rising hopes of Fed rate cut

NASDAQ Composite (.IXIC) rising hopes of Fed rate cut

Stocks closed solidly higher Wednesday, after volatile morning trade that saw benchmarks flipping between gains and losses, as investors digested a round of conflicting economic data that showed strength in the U.S. services sector but signaled a potential weakening of the labor market.

Erratic morning trade gave way to solid gains in the afternoon, as investors keyed in on falling bond yields that have reinforced hopes that the Federal Reserve will cut interest rates this year, a move that was seen as more likely following comments made by Federal Reserve Chairman Jerome Powell on Tuesday.

How did the benchmarks fare?

The Dow Jones Industrial Average DJIA, +0.82% rose 207.39 points, or 0.8%, to end at 25,539.57, while the S&P 500 index SPX, +0.82% finished 22.88 points higher at 2,826.15, also a gain of 0.8%. The Nasdaq Composite Index COMP, +0.64% rose 48.36 points, or 0.6% to close at 7,575.48.

At session lows the S&P had lost 2.27 points, or less than 0.1% and the Nasdaq was down 28.95 points, or 0.4%

Powell on Tuesday said the central bank was monitoring escalating trade tensions and would “act as appropriate” to sustain domestic economic expansion, which has showed signs of waning as Washington wages tariff disputes on multiple fronts.

Powell’s comments imply that the Fed might look to lower benchmark interest rates, which stand at a range between 2.25% to 2.50%, which would reduce borrowing costs for corporations and has sparked fresh enthusiasm for buying equities.

Trade tensions, however, remain the reality, with the Trump administration saying it will raise import duties against Mexico on Monday. Republican Senators, however, are at least privately pushing back on the president’s plan to use tariffs to force Mexico to stem the tide of Central American immigrants seeking to enter the U.S., according to several news reports.

White House trade adviser Peter Navarro appeared to leave the door open to avoiding the threatened 5% tariffs on all Mexican imports during an interview with CNN on Wednesday morning. “We believe that these tariffs may not have to go into effect precisely because we have the Mexicans’ attention,” he said, noting that Vice President Mike Pence, Secretary of State Mike Pompeo and others will meet with Mexican officials today in Washington to discuss immigration policy.

Some prominent Senate Republican, meanwhile, have pushed back against the Mexico tariff threat.

Meanwhile, Chinese officials have indicated that the world’s second-largest economy could restrict exports of rare-earth elements, which are key ingredients in products ranging from mobile phones to rechargeable batteries to jet fighters, to retaliate against the U.S. tariff increases and sanctions against tech giant Huawei.

Overall, the bias in prices is: Downwards.

Note: this chart shows extraordinary price action to the downside.

By the way, prices are vulnerable to a correction towards 7,730.91.

The projected upper bound is: 7,808.78.

The projected lower bound is: 7,339.68.

The projected closing price is: 7,574.23.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 3 white candles and 7 black candles for a net of 4 black candles. During the past 50 bars, there have been 24 white candles and 26 black candles for a net of 2 black candles.

A long lower shadow occurred. This is typically a bullish signal (particularly when it occurs near a low price level, at a support level, or when the security is oversold).

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 55.4039. This is not an overbought or oversold reading. The last signal was a buy 1 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 43.11. 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 1 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 -44. This is not a topping or bottoming area. The last signal was a buy 1 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 24 period(s) ago.

Rex Takasugi – TD Profile

NASDAQ COMPOSITE closed up 48.358 at 7,575.475. Volume was 5% below average (neutral) and Bollinger Bands were 34% wider than normal.

Open High Low Close Volume___
7,585.6797,589.4737,498.1677,575.475 537,315,200

Technical Outlook
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish

Moving Averages: 10-period 50-period 200-period
Close: 7,562.73 7,855.37 7,518.98
Volatility: 23 19 26
Volume: 571,184,448 541,134,528 586,625,536

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 0.8% above its 200-period moving average and is in an downward trend. Volatility is high as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of .IXIC at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on .IXIC and have had this outlook for the last 18 periods.

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