NAS100 Heads Towards Another Monthly Close in Bear Territory

NAS100 Analysis

The Federal Reserve has entered an aggressive tightening cycle this year, in order to bring inflation down, having delivered three rate hikes, with the one earlier this month, being the largest in almost thirty year.

Mr Powell had then pointed to "either a 50 or 75 basis point increase" and we have since seen many officials reaffirming their resolve to fight inflation and continue their frontloaded tightening. [1]

The latest remarks come from Ms Mester, who advocated today on CNBC for another 0.75% increase next month "if conditions were exactly the way they were today going into that meeting". [1]

However, these actions increase risk of a recession and fears of stagflation, with preliminary data having revealed economic contraction during the first quarter.

Markets will have the chance to get updates on those key indicators, since final Q1 GDP is due today and Personal Consumption Expenditures on Thursday, while Mr Powell speaks today on ECB's Forum in Sintra.

The tech sector is particularly vulnerable to this high inflation/rising rates environment and NAS100 leads this year's losses in US stock markets. It trades deeply in bear market territory and loses around 8% this month alone at the time of writing, while erasing around 50% of its rally from the pandemic lows to the November 2021 record highs.

Last week's rebound was contained by the EMA200 and the downward bias remains intact. NAS100 remains vulnerable to 10,673, but bears may need a catalyst to tackle this level and look to 10,088 and beyond.

Despite the poor performance this week, another effort to take out the EMA200 (12,130-12,231) would not surprise us, although sustained strength seems hard and the upside is well-protected, with the thick daily Ichimoku Cloud looming.

Nikos Tzabouras

Senior Market Specialist

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 29 Jun 2022 https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20220615.pdf

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