The rally of the Nasdaq reached a climax in late November, and ever since then, the price action of the index has been on the retreat. Currently, a minor bullish pullback appears to be developing, which would allow bears to utilise trend continuation trading strategies; chiefly, they would be able to sell the next peak in anticipation of continued price depreciation afterwards.
Tech stocks would likely remain on the retreat in the short term ahead of the next earnings season. Big companies would start reporting towards the end of January, which is likely to cause an upsurge in volatility on the Nasdaq. At least until then, the current prevalence of selling pressure is likely to remain active.
Meanwhile, traders and investors should watch the upcoming inflation data carefully in the U.S., which would be a critical indicator of FED's next course of action regarding monetary policy. According to the preliminary forecasts, inflation growth - of both consumer and producer prices - is expected to fall moderately in December, even though global price pressures remain considerable.
This is likely to bolster the need for a more hawkish policy stance of Jerome Powell and his colleagues from the FOMC, which, in turn, would increase the fallout on stocks. In other words, this week's CPI and PPI numbers in the U.S. would probably drive Nasdaq's correction even lower, which substantiates the primary expectations.
|Short Term||Long Term||Net % Gains|
|378 BPS||104 BPS||Pending||Pending||
|378 BPS||104 BPS|
|Net % Gains|
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