The NASDAQ rose to a key support level as the US trading session closed. This key level can be seen at $19,490.42 from the 13-14th June. The decline over the past 5 days has been the strongest bearish impulse wave since May and is forming a full correction. However, the price since reaching the support level has quickly rebounded. The NASDAQ this morning trades 0.50% higher, but will the price continue to rise when the US session opens?
The decline was largely due to the decline in NVIDIA stocks as well as the most influential stocks. NVIDIA stocks fell by 6.68% and 72% of the most influential stocks depreciated. According to analysts the reasoning behind this was related to inside sales, geopolitical tensions and the expiry of options. However, most economists do believe while earnings remain strong and the economy continues to avoid a recession, buyers will re-enter at a lower price. The question is whether this support level is the lower price chosen.
There are still fundamental signs that the global stock market is under pressure, particularly when monitoring the EU and UK stock markets. The DAX trades 1.07% lower, the French CAC 0.69%, the Euro Stoxx 50 0.52% and the FTSE100 0.24%. However, the main US indices are correcting upwards and 70% of NASDAQ’s most influential stocks are trading higher in pre-trading hours. If this continues after the market opens, the possibility of a correction potentially remains.
Within this morning’s Asian and European session, the best performing stock is NVIDIA which has risen 2.33%. The worst performing is Ross Stores Inc, but it only holds a weight of 0.34%. The afternoon investors will be waiting for the CB Consumer Confidence and Richmond Manufacturing Index. If the data reads higher than expectations, the release could support the stock market which took a slight hit from a lower risk appetite.
For the index to obtain buy signals, the price must remain above $19,622.62 in the imminent future. For the price to rise in the longer term, investors will ideally look for the price to rise above the 75-Bar EMA and 100-BAR SMA on the 2-hour chart. Currently this has built a range between $19,712.53 and $19,782.35. It is also most likely at this range for the RSI to rise above the 50.00 mark (currently at 39.53).
Michalis Efthymiou
Market Analyst
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