What next for the bond beaten Nasdaq?
A mixed end to last week as the Dow Jones closed higher on Friday. However, the S&P and Nasdaq closed lower as tech stocks strained under the weight of new cycle highs in U.S yields.
Share this:
A mixed end to last week as the Dow Jones closed higher on Friday. However, the S&P and Nasdaq closed lower as tech stocks strained under the weight of new cycle highs in U.S yields.
The unrelenting march higher in bond yields resumed during the Asian time zone on Monday. Combined with a surge in new virus cases in China and higher than expected Chinese inflation data, regional equity markets slumped to start the week.
In Hong Kong, the Hang Seng Index fell by 3.46%. In Tokyo, the benchmark Nikkei 225 index fell by 0.6%. While, U.S. equity futures, led by the tech-heavy Nasdaq, are trading 1% lower at 14181.
The start of Q2 2022 now resembles the shaky opening weeks of Q1 2022. For those that may have forgotten, in the opening two weeks of Q1 2022, the Nasdaq fell over 7% as bond yields began their impulsive move high.
As regular readers of our Morning Brief know, we hold the view that "an already troubling backdrop is deteriorating" for U.S. stocks markets as the Fed tries to tighten monetary to tame inflation while at the same time attempting to engineer a soft landing.
A gentler version of the thoughts echoed by former Fed President Bill Dudley, who said at the end of last week, "One thing is certain: To be effective, the Fed will have to inflict more losses on stock and bond investors than it has so far."
For the second time in as many months, the Nasdaq has rejected the resistance coming from the 200 days moving average at 15148 and formed an internal double top of shorts at 15260.
Leaning against the two resistance levels, sell bounces in the Nasdaq to 14,400, leaving room to add at 14,800.
The stop loss would be placed at 15,275, and the profit target is a test of support at 13,200/00, providing a trade with a risk-reward ratio of more than two to one.
Source Tradingview. The figures stated are as of April 11th 2022. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation
How to trade with City Index
You can trade with City Index by following these four easy steps:
- Open an account, or log in if you’re already a customer
• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore
- Search for the company you want to trade in our award-winning platform
- Choose your position and size, and your stop and limit levels
- Place the trade
Related tags:
Open an account in minutes
Experience award-winning platforms with fast and secure execution, and enjoy tight spreads from 0.5 pts on FX and 0.3 pts on indices.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
USD/JPY forecast: 151 seems plausible, 152 may be a stretch
USD/JPY is clinging to 150 despite the weaker US dollar on Tuesday, as there seems little reason for traders to bid the yen. And unless we receive a compelling reason to buy then yen via a surprisingly hawkish BOJ or broad risk-off environment, it becomes difficult to construct an overly bearish case for USD/JPY whilst the Fed remain quiet about rate cuts.
US dollar, Nasdaq, S&P 500, gold analysis: Forward testing US CPI
Attention shifts the today’s US CPI report, which is arguably the biggest event of the week. So we crunch some numbers on the US dollar, S&P 500, Nasdaq and gold to see how they have performed around it.
USD rally pauses for breath, DAX finds stability amidst the noise
We're seeing early signs that the US dollar rally could be losing steam and indices such as the DAX are finding stability. Whilst too early to pick out trend reversals, it does suggest that sentiment of this week is quietly changing.
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.forex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.