The Nasdaq rose on Monday as markets turned to Mega cap stocks while awaiting updates on a fresh round of talks about raising the US debt ceiling, and shares of Micron fell after China’s ban on its memory chips.
President Joe Biden and House Republican Speaker Kevin McCarthy will get together for talks on Monday after their discussions almost fell apart on Friday.
The fresh talks come less than two weeks before a deadline after which the Treasury warned that the federal government will struggle to pay its debts.
Federal Reserve President Neel Kashkari made several critical comments regarding the current state of the US economy, causing stocks to become more positive.
He noted that the decision to raise interest rates or pause in June was a close call, indicating uncertainty in the Fed’s future policy direction, going against what most pundits expected.
Kashkari also expressed concern over inflation, mentioning that he saw no evidence of banking stress contributing to inflation control, which could be seen as somewhat of a negative for bank stocks.
The ActivTrader market sentiment tool is showing that some 32 percent of traders are bullish towards the US dollar index, which is a decrease of around 5 percent since last week.
The fact that sentiment is still very bearish is worrying for bears. Especially since the price rise could target 14,000. I would prefer the herd to flip to bullish before I think we see a meaningful price correction for the Nasdaq.
US100 Short-term Technical Analysis
Looking at the four-hour time frame, the technicals show that the Nasdaq could be forming a breakout as bulls crack resistance. Higher highs as traders know is very bullish technically.
It should also be noted that bearish divergence has formed, this can be seen extending down towards the 1,320 area. At present it seems that 1,400 is likely to be tagged in the short-term.
US100 Medium-term Technical Analysis
The medium-term picture for the Nasdaq looks quite bullish for me, due to the fact that a large head and shoulders pattern has been invalidated on the daily time frame.
Therefore, a sustained move above the head of the pattern, currently located around the 13,800 level could prompt with significant upside for the leading US tech index. Caution is warranted for bears.