NQ100_m waits on Fed rate decision :: InvestMacro

• NQ100_m hits fresh 2023 high yesterday

• Index could be rocked by looming Fed decision

• Bulls in control but RSI overbought on D1 chart

• Levels of interest at 16770.6, 16100 & 15800

The NQ100_m jumped to a fresh 2023 high in the previous session after signs of slowing inflation supported hopes around the Fed cutting interest rates next year.

November’s inflation report painted a mixed picture with annual consumer prices slipping to 3.1%, down from 3.2% in October. The annual core figure, which strips out volatile energy and food prices rose by 4% in line with the prior month. However, the monthly core figure rose 0.3%, slightly faster than 0.2% in the previous month.

While traders are still pricing in a 25-basis point cut by May 2024, this could be influenced by the Fed decision later today.

As highlighted in our week ahead report, the central bank is widely expected to leave rates unchanged, so focus will be on the updated economic projections, “dot plot” and Powell’s press conference.

Whatever the outcome of the Fed meeting, it could rock the NQ100_m which is filled with tech stocks that remain sensitive to interest rates.

Redirecting our attention back to the technicals…

The NQ100_m is respecting a bullish channel on the weekly charts with the next key level at the all-time high of 16770.6 created back in November 2021.

It is a similar story on the daily charts with bulls clearly in a position of power. There have been consistently higher highs and higher lows while prices are trading well above the 50, 100, and 200-day SMA. However, the Relative Strength Index (RSI) is trading above 70, signalling that prices are heavily overbought, suggesting a potential throwback down the road.

• Should 16100 prove to be reliable support, this may provide a foundation for bulls to charge towards 16770.6

• A move back below 16100 could trigger a selloff towards 15800 and 15540.