Stocks Rally on Monday
US stocks are on watch today after a strong rebound yesterday. The NASDAQ jumped by just over 2% on the day, now up more than 4% from the month’s lows, as a rebound in tech names buoyed sentiment. The rally comes in response to a dovish shift in traders’ Fed outlook on the back of dovish comments from Fed’s Williams on Friday and some weakness in US jobs data. Traders will now be closely watching a slew of US due over the shortened holiday week, starting with PPI and retail sales later today.
December Easing Forecasts
Pricing for a December cut has jumped materially in recent days, now up around 80% from sub 40% last week. Despite the shift in outlook, we’ve yet to see a downside reaction in USD. However, if se wee any fresh data weakness over the week, this could well spark a fresh sell off in USD paving the way for a further rally in stocks and a return to highs in the NASDAQ.
Earnings Boost
With the current US earnings season seeing over 80% of companies having beaten earnings forecasts, there is plenty to keep stocks supported near-term. Uncertainty in recent weeks around the Fed, driven by the govt shutdown was the main headwind for stock bulls. However, with the shutdown resolved, data coming through and Fed expectations shifting back to the dovish side, stocks should continue to recover provided we don’t see any hawkish data surprises.
Technical Views
NASDAQ
The correction lower in the index has found strong support into a fresh test of the 24,076.50 level. While this level holds, focus is on a recovery higher with 25,428.75 the first hurdle for bulls. Back above there and the YTD highs will be back in view. If we break back below 24,076.50, however, focus turns to deeper support at 22,294.50 next.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.