Two reasons for Nasdaq to maintain its bullish trend:
• The hope of inflation easing to 2%
• The hope of AI. The birth of ChatGPT at the end of 2022, which for the first time gave investors tangible ideas about the potential of investing in AI stocks.
Source: TradingView
THERE IS STILL ROOM FOR 1,000 POINTS OF UPSIDE
As of now, the latest May CPI data is 3.3%, better than the expected 3.4%. With the continued hope in AI, the strategy remains to buy on dips with measured risk below the weekly trendline.
Source: TradingView
For shorter-term traders, buy on dips with measured risk below the daily trendline.
Source: TradingView
WHY 21,000 AS A POTENTIAL TARGET?
Nasdaq’s potential resistance is at 21,000 due to unpredictable inflation. If CPI rises to above 3.5%, markets may face resistance. During the FOMC meeting on 12 June, Jerome Powell stated they lack the confidence to start loosening policy.
“Have we reached an appropriate level of confidence that inflation is moving down sustainably at 2 percent or alternatively, do we see really unexpected signs of weakness in the labour market that would call for a response, which is, which is another thing that could happen. But, again, we don't see that. We don't see ourselves as having the confidence that would warrant beginning to loosen policy at this time.”
Biden's latest tariff on China renews the US-China trade war, adding pressure to the supply chain crisis from the Middle East conflict and the Russian-Ukrainian war, potentially increasing CPI.
Discover the art of plotting effective trend lines and parallel lines through this video.
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