- A recession is looming over the world’s largest economy.
- Markets are trying to keep up with the Fed’s rate hikes outlook.
- The price of NQ retests the 11500.00 level and could hit 11250 soon.
The world’s largest economy is facing a possible recession, which has caused panic among investors, pushing Nasdaq 100 (NQ) futures below 11500. Investors are scrambling for safety in the dollar, which is soaring and running away from collapsing equities. This move follows a bleak US session yesterday after Goldman Sachs forecasted a 75-bps hike at the Wednesday Fed meeting.
“The US market is the biggest in the world, so when it catches a cold, the rest of the world does as well,” said Clara Cheong, global market strategist at JP Morgan Asset Management.
The worst thing right now, as markets are crushing, is that no one under 60 has ever experienced stagflation, so there is no experience to draw on, hence the panic.
“It will be a challenge until the market feels the end of Fed tightening is visible. And it’s safe to say the end is not in sight,” said Yung-Yu Ma, chief investment strategist at BMO Wealth Management. “We are in a difficult spot.”
Markets scramble to reprice the Fed’s interest rate outlook after hot US inflation, pushing futures’ underlying assets lower as they lose value. Barely two weeks ago, the expected peak for the Fed’s policy rate was at 3%; now, it is expected to peak at just under 4% around June next year.
Investors will be paying close attention to the US producer price index, which is expected to go up later in the day.
Nasdaq 100 (NQ) futures technical forecast:
Looking at the 4-hour chart, we see a strong bearish move that has pushed the price below 11500.00. The price is lying well below the key 30-period SMA. This move has seen the price push beyond its envelope, showing a lot of bearish momentum. Since the RSI is trading in the oversold region, there might be a retracement or consolidation before we see the price pushing lower with the same strength.
However, if bears keep up their strength, we could see the price getting to 11250.00 and possibly lower because 11500.00 has been broken and retested. The Bears could now be waiting to gather momentum to push lower.
