NASDAQ Firms Up On Firm US Data, Dwindling Brexit Prospects

Yesterday (24/05), NASDAQ moved up in a session without volatility after Fed speakers reiterated a likely FED rate hike in June or July

U.S. crude oil price rocketed to close to $50 a barrel in early Asian trade Wednesday, hitting its highest level in over seven months after a survey from the Wall Street Journal indicated that U.S. crude stockpiles is estimated to fall by 2.5 million barrels in the week ended May 20. The escalation of oil price could boost the U.S inflation to reach the Fed’s objective of 2% inflation.

U.S new home sales data for April was released by the U.S Census Bureau on Tuesday. The number edged up to 619,000 (annualized rate), the highest level since 2008, with prices setting record highs. The flow of positive U.S. data as well as solid comments from Fed officials helped to strengthen the dollar and relieve investors’ suspicions that the economy might not be stable enough to weather a rate hike in the next couple of months.

Moreover, NASDAQ benefited from upbeat information from England, after the BOE Governor Mark Carney defended his viewpoint against Brexit before Parliament’s Treasury Select Committee. Latest figures indicate more than 80% support for Britain to remain in the European Union.

Investors are awaiting upcoming comments from FOMC members Harkers, Kashkari and Kaplan today on the possibility of a FED rate hike being on the table in the upcoming months. Any visibly hawkish bias in the central bank’s interest rate views will cast a shadow on these companies, and may in turn dampen the index.

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Fig. NASDAQ D1 Technical Chart

On the daily chart, the index made a sharp move higher to 4460.74. The stochastics chart shows that the %K line (blue line) has reached the overbought zone far ahead of %D line (red line). The buying force is overwhelming and the index is likely to continue rising. The bullish trend is again consolidated thanks to RSI shooting to 58.7109. Nevertheless, the price is anticipated to plunge soon, as the SAR trend indicator(red arrow) still suggests a short position.

Trade suggestion

Buy Stop at 4461.00, Take profit at 4507.83, Stop loss at 4406.36

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