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Nasdaq stays bearish, eyes cycle lows

The bearish trend in equities remains intact, with investors possibly sending the tech-heavy Nasdaq toward the current cycle lows.

Yesterday’s colossal sell-off likely led to a further capitulation amid the bullish camp, possibly leading to another day of losses today.

When writing, the index was down nearly 0.5%, just as Wall Street opened for trading. Investors paid attention to several important US macro data.

US macro disappoints

The third assessment of Q1 GDP seems to support the deteriorating image of the US economy that is now apparent in countrywide sentiment measures.

The GDP growth estimate was lowered even more to -1.6% annualized (from -1.5 %).

Personal Consumption growth collapsed from +3.1% to just +1.8% – the weakest since the COVID lockdown collapse.

Lastly, inflation, as measured by the GDP Price Index, increased from +8.1% to +8.2%, marking its highest level since June 1981.

Consumer sentiment craters

According to a survey released on Tuesday, the Conference Board’s assessment of consumer confidence dropped to 98.7 in June, according to a survey released on Tues. Meanwhile, a gauge of expectations for the future fell to its lowest point in a decade.

Additionally, the consumer sentiment assessment from the University of Michigan, which revealed that consumer sentiment had dropped to its lowest level ever recorded in June, matched the results of the Conference Board.

“While we see strong economic fundamentals preventing the U.S. economy from slipping into recession this year, continued deterioration in household confidence may cascade into weaker-than-expected consumer spending that could stall the expansion,” said Mahir Rasheed, U.S. economist at Oxford Economics, in a note on Tuesday.

The main markets continued to fall as a result of the consumer confidence reading’s crippling effect, and as of this writing, the Dow Jones is still down by 15%, and the SP500 is down by 20% for the year. The Nasdaq is already down nearly 28% and on track for its worst quarterly performance since 2008.

You can also read: Australia is experiencing an energy crisis

Later today, FOMC Chairman Jerome Powell, ECB President Christine Lagarde, and BOE Governor Bailey will speak at the ECB’s annual Forum on Central Banking.

Trend stays bearish

Tuesday’s failure at the long-term downtrend line could lead to further selling, with bears now attacking the strong support of May’s lows near 11,550 USD, while the vital demand zone stands at the current cycle lows at 11,150 USD.

On the upside, the index must close above 12,000 USD to stabilize.

Nasdaq daily chart, Source: Author´s analysis,

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