- Federal Reserve meeting and inflation data is now behind us.
- Nasdaq 100 keeps making new highs, but it looks like bulls have an appetite for more.
- Meanwhile, bears seem to be taking over in Europe with DAX breaking below key support.
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This week's 'Super Wednesday' brought a double dose of market-moving news: cooler-than-expected inflation data and the Federal Reserve's decision, statement and the eventual press conference.
The Fed held steady, keeping both rates and its hawkish rhetoric unchanged. However, the lower inflation reading proved to be a welcome surprise for markets, particularly in the US. This news fueled a rally, with the Nasdaq 100 rocketing to new highs.
The Fed's current projections, released in the dot plot, now point to only one rate cut this year, down from the three cuts initially expected. Despite this shift, the market remains optimistic about a September rate cut, with tech stocks leading leading US indexes higher.
Across the Atlantic, however, a different story is unfolding. European markets, particularly the German DAX, are facing a bearish onslaught. Key technical support levels have been broken, raising concerns that bears may control the situation for the foreseeable future.
In this piece, we will take a look at the technical picture for indexes in both regions, starting with US:
Nasdaq 100 Charges Higher, Briefly Pausing Before Next Push
The Nasdaq 100, the leading tech index, continued its relentless climb on Wednesday, surging to new all-time highs near 19,680 points on robust buying pressure. While Thursday saw a slight pullback, analysts view this as a potential short-term buying opportunity rather than a sign of a reversal.
If a correction does materialize, key support levels to watch lie between 19,200 and 19,000 points. This zone is further bolstered by an upward trend line. A decisive break below this support would be a significant signal of a deeper downturn, but that's seen as a less probable scenario at this time.
German DAX Tumbles: Key Support Level at 17,700 in Play
The German DAX is experiencing a sharp correction, with the downward movement steadily gaining momentum. The index is currently eyeing the psychologically important level of 18,000 points as potential resistance. However, the critical support zone lies near the April lows of around 17,700 points, with a possible pause at 17,900.
A breach below this crucial area could trigger a deeper sell-off or even a trend reversal to the downside. Conversely, a strong defense and a buying surge here would present an interesting buying opportunity in line with the prevailing uptrend.
The key factor influencing the DAX's direction will be upcoming macroeconomic data from the eurozone. This data will be instrumental in shaping the European Central Bank's (ECB) monetary policy decisions for the latter half of 2024.
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Disclaimer: This article is written for informational purposes only; it does not constitute a solicitation, offer, advice, counsel or recommendation to invest as such it is not intended to incentivize the purchase of assets in any way. I would like to remind you that any type of asset, is evaluated from multiple perspectives and is highly risky and therefore, any investment decision and the associated risk remains with the investor.