FundamentalOverview

The Nasdaq yesterday soldoff aggressively following the FOMC decision as the market perceived it as morehawkish than expected.

Overall, apart from someslight tweaks, the Fed was in line with the market’s expectations, and theselloff might have been an overreaction. There’s lots of algo-driven noiseduring such big events, so be careful of that.

The data is what reallymatters now as it will decide what the Fed is going to do. It will likely takejust one soft CPI report in January to see the market reacting in a dovish wayand print new all-time highs.

For now, the conditions forfurther upside remain in place. In fact, Trump’s policies should be a positivedriver for growth in 2025 and with the Fed remaining in an easing cycle, growthshould remain positive and might even accelerate as seen already recently bythe Atlanta Fed GDPNow indicator.

The risk in 2025 is ofcourse inflation and the Fed’s reaction function. Right now, the Fed’s reactionfunction is that a strong economy would warrant a slower pace in the easingcycle and not a tightening. That should still be supportive for the stockmarket.

If the Fed’s reactionfunction were to change to a potential tightening, then that will likelytrigger a big correction in the stock market (if not even a bear market giventhe stretched valuations) on expected economic slowdown. For now, we remain ina “buy the dip” environment.

NasdaqTechnical Analysis – Daily Timeframe

On the daily chart, we cansee that the Nasdaq sold off aggressively into the key supportzone around the 21338 level where we had also the major trendline for confluence.The buyers stepped in with a defined risk below the trendline to position for arally into a new all-time high. The sellers, on the other hand, will want tosee the price breaking lower to increase the bearish bets into the 20381 levelnext.

Nasdaq TechnicalAnalysis – 4 hour Timeframe

On the 4 hour chart, we cansee more clearly the dip buyers entering the market around the lows with adefined risk below the trendline. The sellers will need a break below thetrendline to keep targeting new lows.

Nasdaq TechnicalAnalysis – 1 hour Timeframe

On the 1 hour chart, there’snot much else we can add here as the buyers will keep on piling in around theselevels to position for a new all-time high, while the sellers will wait for abreak below the trendline to increase the bearish momentum. The red linesdefine the average daily range for today.

Upcoming Catalysts

Today we get the latest US jobless claims figures, while tomorrow we concludethe week with the US PCE data.