The Nasdaq 100 Index (CME: NQ) demonstrates resilience, trading flat ahead of the Federal Reserve’s pivotal interest rate decision. Positive market momentum has lingered with four consecutive days of gains for the tech-heavy index, which is also on course for a seventh straight week of gains.
The market has anticipated a holding of rates, widely expected to maintain interest rates within the 5.25%-5.50% range, fuelled by recent positive economic indicators like the CPI data. This sentiment has driven the Nasdaq to close at fresh 2023 highs. Investor anticipation revolves around the Fed’s monetary policy announcement. Markets keenly await Chair Jerome Powell’s guidance on future rate trajectories, especially amid signs of potential rate cuts in 2024.
Recent economic data, including November’s CPI, cement expectations of steady rates, yet the focus remains on Powell’s commentary and the release of the “dot plot.”
Technical Analysis:
The 4-hour chart shows that amidst anticipation surrounding the Federal Reserve’s final decision for the year, the Nasdaq 100 exhibited a flat trend, hovering at 16,610.25. The index futures are currently trading sideways above their key moving averages, the 20-SMA (green line), 50-SMA (blue line), and 100-SMA (orange line). This suggests a temporary pause in the upward momentum. The RSI is at 81.12, indicating overbought levels and suggesting a potential correction or breakout.
Short-term trading opportunities could exist towards the 16,653.50 resistance level should the Fed decide to keep the rates unchanged. A break above the initial resistance would bring the 16,714.50 and 16,783.50 resistance levels into play. Conversely, a rate hike could lead to a pullback towards the 16,528.25 support level, potentially extending further to the 16,455.75 support level.
Summary:
The Nasdaq 100 faces a crucial day as investors await the Fed’s decision. While the market anticipates no change in rates, Powell’s commentary will be key.
The technical indicators suggest potential short-term movements based on the Fed’s rate decision, with the 16,653.50 resistance level and 16,528.25 support level likely to be key dictators of the futures’ direction in the short-term.
Sources: TradingView, Trading Economics, Reuters, Dow Jones Newswire.
Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst
Disclaimer: Trive South Africa (Pty) Ltd, Registration number 2005/011130/07, and an Authorised Financial Services Provider in terms of the Financial Advisory and Intermediary Services Act 2002 (FSP No. 27231). Any analysis/data/opinion contained herein are for informational purposes only and should not be considered advice or a recommendation to invest in any security. The content herein was created using proprietary strategies based on parameters that may include price, time, economic events, liquidity, risk, and macro and cyclical analysis. Securities involve a degree of risk and are volatile instruments. Market and economic conditions are subject to sudden change, which may have a material impact on the outcome of financial instruments and may not be suitable for all investors. When trading or investing in securities or alternative products, the value of the product can increase or decrease meaning your investment can increase or decrease in value. Past performance is not an indication of future performance. Trive South Africa (Pty) Ltd, and its employees assume no liability for any loss or damage (direct, indirect, consequential, or inconsequential) that may be suffered from using or relying on the information contained herein. Please consider the risks involved before you trade or invest.
