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Date: 14th February 2025.


Can The NASDAQ Maintain Momentum at Key Resistance Level?



Trading Leveraged products is Risky


The price of the NASDAQ throughout the week rose more than 3.00% to bring the price back up to the instrument’s resistance level. However, while taking into consideration higher inflation, tariffs and the resistance level, could the index maintain momentum?


US Inflation Rises For a 4th Consecutive Month


The US Consumer Price Index, or inflation, rose for a 4th consecutive month taking the rate even further away from the Federal Reserve’s target. Analysts were expecting the US inflation rate to remain unchanged at 2.9%. However, consumer inflation rose to 3.00%, the highest since July 2024, while Producer inflation rose to 3.5%.


Higher inflation traditionally triggers lower sentiment towards the stock market as investors' risk appetite falls and they prefer the US Dollar. However, on this occasion bullish volatility rose. For this reason, some traders may be considering if the price is overbought in the short term.


Addressing these statistics, US Federal Reserve Chair Jerome Powell acknowledged that the Fed has yet to achieve its goal of curbing inflation, adding further hawkish signals regarding the monetary policy. Other members of the FOMC also share this view. Today, Raphael Bostic, President of the Federal Reserve Bank of Atlanta, stated that the Fed is unlikely to implement interest rate cuts in the near future. This is due to ongoing economic uncertainty following the introduction of trade tariffs on imported goods and other policies from the Republican-led White House.


Most of the Federal Open Market Committee emphasizes additional time is needed to fully assess the situation. According to the Chicago Exchange FedWatch Tool, interest rate cuts may not start until September 2025.


What’s Driving The NASDAQ Higher?


Earnings data this week has continued to support the NASDAQ. Early this morning Airbnb made public their quarterly earnings report whereby they beat both earnings per share and revenue expectations. The Earnings Per Share read 25% higher than expectations and Revenue was more than 2% higher. As a result, the stock rose more than 14%. Another company this week that made public positive earnings data is Cisco which rose by more than 2% on Thursday.


Another positive factor continues to be the positive employment data. Even though the positive employment data can push back interest rate cuts, the stability in the short term continues to serve the interests of higher consumer demand. The US Unemployment Rate fell to 4.00% the lowest in 8 months. Lastly, investors are also increasing their exposure to the index due to sellers not being able to maintain control or momentum. Some economists also increase their confidence in economic growth if Trump can obtain a positive outcome from the Ukraine-Russia negotiations.


However, during Friday’s pre-US session trading, 80% of the most influential stocks are witnessing a decline. The NASDAQ itself is trading more or less unchanged. Therefore, the question again arises as to whether the NASDAQ can maintain momentum above this area.


NASDAQ - News and Technical analysis


In terms of technical analysis, the NASDAQ is largely witnessing mainly bullish indications on the 2-hour chart. However, the main concern for traders is the resistance level at $21,960. On the 5-minute timeframe, the price is mainly experiencing bearish signals as the price moves below the 200-period simple moving average.


The VIX, which is largely used as a risk indicator, is currently trading 0.75% higher which indicates a lower risk appetite. In addition to this, bond yields trade 6 points higher. If both the VIX and Bond yields rise further, further pressure may be witnessed for index traders.
Please note that times displayed based on local time zone and are from time of writing this report.


Always trade with strict risk management. Your capital is the single most important aspect of your trading business.


Please note that times displayed based on local time zone and are from time of writing this report.


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Michalis Efthymiou
HFMarkets


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