The Nasdaq has found support after Trump ruled out strikes on Iran before the midterm elections, but stalled Strait of Hormuz talks keep geopolitical risk high. Wednesday's US CPI report is the next focus, and hedging ahead of it could leave the index weaker in the near term.
The Nasdaq found some support after Trump ruled out strikes on Iran before the midterm elections. The prolonged stalemate, though, continues to keep the geopolitical risk high.
Iran talks remain unresolved
Over the weekend, Iran said the US's response to its proposal to reopen the Strait of Hormuz was insufficient. Negotiations are still ongoing, and Iran's Foreign Ministry Spokesperson said today that Tehran is still reviewing US positions and will reply via intermediaries when the review is over.
This is likely to limit any downside move in crude prices until a breakthrough arrives. The earnings season could bring more volatility than usual, but the focus will remain mainly on US-Iran developments and the US CPI due on Wednesday.
CPI hedging could weigh on the index
A hotter than expected core CPI could raise the probabilities for a Fed rate hike in October and weigh on the Nasdaq. A soft report, on the other hand, will likely provide a short-term boost. Because there has been some hedging into CPI reports in the past months, the index could see some weakness ahead of the release.
Key levels on the daily chart
On the daily chart, the Nasdaq printed a new all-time high recently but failed to extend the gains. A major upward trendline defines the bullish structure, and buyers would look to lean on it in a pullback to position for new record highs. Sellers, on the other hand, will look for a break lower to target the 28,750 level next.
On the 1 hour chart, a swing low around 30,760 could act as support. On the 4 hour chart, buyers will look for a break higher, with 31,500 as the first target.
On Thursday, the calendar brings the US PPI, US Retail Sales and US Jobless Claims figures.
Source: Investinglive
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