NASDAQ Preparing to Sell in June

15. Mai

This day we have European data on employment, industrial production and GDP growth, as well as inflation rates for some countries such as Spain. The afternoon is very important for the markets with the Fed's manufacturing index, inflation, retail sales, and vehicle sales data, as well as the PCI for the month of April. With less relevance we also have information on crude oil reserves and derivatives, as well as very short term bond auctions. Closing almost the American afternoon, the Minneapolis FED with Neel Kashkari and Governor Michelle W. Bowman will issue statements. Bowman. Already in his last statement almost 1 week ago, he reported that the expectation of interest rate cuts to go after the 2% target.

If we look at the NASDAQ chart (Ticker AT: USATEC), there is a strong resistance zone in the 1 hour time frame at 18,400 points, and a strong support zone at 17,800 points that started on May 3rd. The index has presented a price recovery trend strongly driven by the Magnificent 7. In particular, it is worth noting that in the field of AI, companies such as AMD are pulling the innovation bandwagon and have grown by more than 10.9% year-on-year. That is, by mid-2023, it reached 25% growth, compared to 10% in 2020. The sales performance of mining and gaming servers and machinery and now AI as the main driver of innovation have made the race for AI go global. Always keeping AMD and Intel as drivers of advanced chipsets. While it is true that META, Microsoft, Oracle Cloud (a subdivision of Oracle), and a few others are growing in influence in this AI sector. Even Apple, has not been able to compete in this sector. Alphabet has not been left behind in this competition and has launched its own AI search engines to compete with ChatGPT.

The data is quite clear that NASDAQ is trailing these leading companies and the rest of the index barely represents what it is, hence this correlation is so strong with them. If we look at the RSI, yesterday there was a back to the mean figure on the RSI so we could see another attempt to return to overbought depending on today's releases from the FED. It is possible that today the index will try to look for higher highs and test the price zone to the upside as the price bell marks its strong zone at around 18220 points. It would not be unusual to see it reach new highs and then correct to the current mid-zone at 18150 points somewhat below the strong price zone of the POC.

Ion Jauregui - AT Analyst




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