The Nasdaq has stalled below a key resistance level as traders wait for today's US CPI report, seen as critical for September Fed policy and Chair Warsh's Jackson Hole speech. A hot print could trigger a short-term selloff, while a soft or in-line reading would likely extend the index's rally toward new record highs.
The Nasdaq's rally has stalled since last Wednesday, when a US-Iran deal failed to materialize within the expected timeline. Since then, price action has stayed mostly rangebound, with only a softer-than-expected non-farm payrolls report offering support.
CPI print carries outsized weight for Fed decision
The July jobs report triggered a dovish repricing in interest rate expectations, with the probability of a September rate hike falling to 38%, compared with 54% before the release. Despite that, the odds of a September hike rose back to 50%.
A significant loss of government jobs caused the whipsaw, making the payrolls report look softer than it actually was. The unemployment rate fell further to 4.1%, and the labor market remains on a better trajectory than it has been over the past three years.
Today's US CPI report will therefore be critical for the September FOMC decision and Fed Chair Warsh's speech at the Jackson Hole symposium. Traders are focused on the Core CPI month-over-month measure, expected at 0.2%. A hot report would likely trigger a short-term selloff as traders increase rate hike bets, while a soft or in-line reading should further reduce the risk of Fed tightening and give the Nasdaq another boost.
Nasdaq consolidates below 30,065 swing level
On the daily chart, the Nasdaq is consolidating below the key swing level at 30,065, where sellers are stepping in with defined risk above the level to position for a drop into the 26,300 support. Buyers, meanwhile, want to see the price break higher to build bullish bets into new record highs.
The four-hour chart shows recent price action forming a symmetrical triangle. Buyers continue to lean on the bottom trendline to target an upside breakout, while sellers lean on the top trendline to position for a downside break. On the one-hour chart, traders are largely waiting for the CPI release before taking fresh positions.
What comes next this week
Tomorrow brings US PPI data and the latest jobless claims figures, and the week concludes Friday with US retail sales and the University of Michigan consumer sentiment report.
Source: Investinglive
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