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Nasdaq struggles below significant resistance

Volatility has been elevated today as anxiety ahead of this week's Fed decision grows.

The tech-heavy Nasdaq 100 index erased all daily gains and quickly turned negative during the US session as investors assessed a series of US macroeconomic data.

Jobs market surprises to the upside

The US Bureau of Labor Statistics (BLS) revealed on Tuesday in its Job Openings and Labor Turnover Summary (JOLTS) that there were 10.7 million available positions as of the final business day in September. The market anticipated 10 million jobs, but this print exceeded that number.

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The report said that the overall number of separations reduced to 5.7 million, while the number of hires edged down to 6.1 million. In addition, layoffs and discharges (1.3 million) decreased somewhat among separations, whereas quits (4.1 million) barely changed.

Manufacturing sectors slows

The ISM Manufacturing PMI dropped to 50.2 from 50.9 in October, indicating that the manufacturing sector in the US continued to grow, but at a slower rate than in September. This resulted in a slight improvement over the market forecast of 50.

According to further information in the report, the Employment Index increased from 48.7 to 50, the Prices Paid Index decreased from 51.7 to 46.6, and the New Orders Index grew slightly from 47.1 to 49.2.

According to Timothy R. Fiore, Chair of the Institute for Supply Management Manufacturing Business Survey Committee, “panelists’ companies continue to carefully manage hiring, month-over-month supplier delivery performance was the best since March 2009, and the Prices Index indicated decreasing prices for the first time since May 2020.”

Finally, S&P Global Manufacturing PMI dropped from 52 in September to 50.4 in October. However, this figure was higher compared to the first estimate and the market expectation of 49.9.

Per Siân Jones, Senior Economist at S&P Global Market Intelligence, who evaluated the survey’s results, “October PMI data foreshadowed a downbeat start to the final quarter of 2022, as US manufacturers registered a renewed and sustained decrease in new orders.”

Under resistance

The immediate outlook seems bearish as long as the index trades below the 11,670 USD level of previous highs and lows. In addition, investors are preparing for tomorrow’s Fed announcement, which will likely cause severe volatility.

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On the downside, the next support seems near 11,050 USD, where the short-term uptrend line is. If not held, the index could drop toward the actual cycle lows near 10,600 USD.

Nasdaq daily chart, Source: Author´s analysis, tradingview.com

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