Hung over as it awaits NFP :: InvestMacro

• NQ100_m continues to pullback from all-time highs
  
• The 161.8 golden Fib ratio is the nearest term support
  
• Prices trading below 21-day EMA
  
• Latest selloff confirms negative RSI divergence
  
• US jobs data could inject more volatility
  

The NQ100_m has closed lower for two consecutive days in the New Year, unable to shake off a hangover after reaching all-time highs.

Some of this pullback has been attributed to a decline in Apple stocks and profit-taking in the stock market.

Given how key US employment data expected to inject volatility into the markets over the next couple of days, investors will be watching to see if the data confirms the Fed’s current stance on possible rate cuts in 2024.

Markets predict that 171,000 new jobs were added to the US economy in December. If so, this will be lower than the 199k created in the previous month. The unemployment rate is expected to tick higher to 3.8% from 3.7% while average hourly earnings are forecast to slip 0.3% MoM compared to 0.4% in November. Should the report meet or print below expectations, this may reinforce bets around the Fed cutting interest rates as soon as March 2024.

Technically speaking…

Wednesday’s close saw the NQ100_m close below its 21-day Exponential Moving Average (EMA) for the first time since going above it in early November last year.

However, the index is above its 50-day EMA, indicating a bullish sentiment. This decline in NQ100_m confirms the negative divergence in the Relative Strength Index (RSI).

This negative divergence saw the RSI decline to the 50-midway point where it is at the time of writing.

The negative divergence can be seen where NQ100_m made a new high on the 28th of December, but the RSI failed to make a new high itself.

If the Index continues to decline, it will encounter the following possible support zones.

• 16325.2: the 161.8 golden Fibonacci ratio (with the Fibonacci retracement drawn from December 20th’s low to December 28th’s high)

• 16062.5: the 50-day Exponential Moving Average

• 15912.3: the 261.8 Fibonacci Retracement level

A return of bullish momentum however could be confirmed with a close above 16496.7- its 21-dayEMA- where bulls (those looking to see the index rally further) will be looking to see NQ100-m, reclaim its all-time highs.