NASDAQ Pauses After Post-Election Hype, US Inflation Ticks Higher – NASDAQ Analysis & Prediction

Key Points

• Traders have just witnessed one of the greatest runs in stock market history. 
• Inflation has ticked higher in the US for a second straight month, with the headline yearly inflation rate at 2.6%.
• Federal Reserve Chairman Jerome Powell speaks tomorrow, with the next decision probabilities hanging in the balance. 
• The NASDAQ is consolidating at all-time highs, and traders should be prepared for the next dip opportunity. 

The Post-Election Hype Is Real

Since Donald Trump won the US presidential election last week, the markets have experienced one of the greatest runs in stock market history. This has added to a remarkable year so far for Wall Street. Here are some eye-watering stats:

– Bitcoin has added $1 trillion in the past year and now has a larger market cap than silver, at $1.7 trillion.
– Nvidia stock (NVDA) is up 200% YTD, adding $2.4 trillion to its market cap.
– The “Magnificent 7” has now added $9 trillion in 4 years, with the index +59% since January. 

Inflation Ticks Higher In The US

US inflation ticked higher for a second consecutive month today, with the yearly inflation rate now at 2.6% from 2.4% last month. This was in line with market expectations, and with this already priced in, the dollar fell off the back of the release. The NASDAQ ticked slightly higher despite the increase in inflation, which is a sign of the buoyant Wall Street mood at the moment.

Jerome Powell Speaks Tomorrow

Federal Reserve Chairman Jerome Powell is due to participate in a panel discussion titled “Global Perspectives” at an event hosted by the Federal Reserve Bank of Dallas. Audience questions are expected and likely to be centered around the Federal Reserve policy going forward.

According to the CME FedWatch Tool, there is a 59% chance the Federal Reserve will cut rates by another 25bps. However, this has come in from 90% just a couple of months ago. If Powell hints at more cuts to come, then this could fuel another rally in the NASDAQ.

NASDAQ Buy Analysis

The bullish trend in the NASDAQ remains very strong, with the recent bull run seeing the price rise from 19886 to 21225 in just four trading days. This meant the NASDAQ printed record highs.

A Fibonacci retracement has been drawn from the swing low to the swing high on the chart above. Considering the strength of this market, traders may want to utilize the 38.2% level of 20,742 as a support level to continue this trend higher.