Daily Price Outlook
The NASDAQ 100 Index is currently trading at 12,562.61, marking a 0.34% increase in the past 24 hours. Traders have gained confidence in the potential resolution of the banking industry crisis, resulting in higher stock prices.
Credit Suisse Takeover
Financial authorities formulated a strategy for UBS to acquire Credit Suisse, aiming to restore trust in the banking system. UBS agreed to acquire Credit Suisse for $3.23 billion, and reports suggest that Switzerland is ready to lend the troubled banks up to $280 billion.
On Sunday, the Federal Reserve, the BoE, and the ECB, along with other major central banks, announced coordinated measures to increase liquidity in their existing US dollar swap deals. The objective was to make obtaining US dollar liquidity easier during times of crisis.
As fears of a global financial catastrophe due to a bank failure subsided, stock prices rose, improving risk appetite following UBS's deal to acquire Credit Suisse. However, the recent rally caused traders to continue taking profits, causing the NASDAQ index to fluctuate between gains and losses.
Fed Considers Interest Rate Hike
With earnings periods between the two quarters, this week does not have much economic data to offer. The main event this week is the Federal Reserve's decision on Wednesday, and the recent financial sector turbulence has increased the odds for interest rate hikes.
Traders and analysts are divided on whether the Federal Reserve will increase its benchmark policy rate. As of Tuesday, CME Group's FedWatch tool indicated a 75.3% chance of a 25 bps hike, while 24.7% believe Chairman Jerome Powell will have to halt his aggressive tightening campaign due to the growing bank failure.
As investors anticipate the FOMC meeting, the US 10-Year Treasury Yield and the Dollar index have slightly increased, with US10YT at 3.496% and DXY trading at 103.39.
Increasing market interest rates burden public and private firms, making business more challenging. Thus, the NASDAQ Index may decline. However, if the Fed halts its aggressive stance, stocks may rise further.
NASDAQ Intraday Technical Levels
Pivot Point: 12546
NASDAQ – Technical Outlook
The NASDAQ is currently trading with a slightly bullish bias, but it faces immediate resistance at the $12,700 level while the support level remains firm around $12,450. The next significant support for the NASDAQ is at $11,850, and a breach below this level may expose the index to the next support area of $11,600.
The MACD and RSI indicators are both in the selling zone, indicating a strong bearish sentiment in the market. However, if the NASDAQ manages to surpass the $12,700 level, it could potentially target the $13,000 or $13,200 levels on the upside.
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