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The NASDAQ Corrects After Middle East Panic, But What Are Signals Indicating?

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Israel’s attack on Iran again escalates fear of a wider Middle East conflict. As a result, the market’s risk appetite falls.
Friday’s Asian session witnessed a clear “risk-off” appetite due to the escalation, but investors soon took advantage of the lower entry levels.
Netflix stock trades 6.50% lower after releasing their company earnings despite beating expectations.
The NASDAQ trades back to the day’s open price, but does technical analysis point to a higher or lower price?

USA100 – Correction Completed But Stocks Remain In The Red!

The USA100 trades slightly lower than the day’s opening price but continues to follow the traditional bearish trend pattern. The last 9 price waves for the index on the 30-minute chart continue to see lower highs and lows including the current bullish momentum. The uptick seen in the European session is still trading lower than the previous high at $17,600. If the price trades below $17,247, technical analysis will point towards the continuation of the downward trend.

Fundamental factors are largely concentrating on Middle East tensions and earnings. The latest attack on Iran is not good news for the stock market, but further escalation is required to becoming damaging. The latest company to release its earnings is Netflix, reflecting revenue of $9.37 billion, which exceeded the $9.27 billion expectations. While the Earnings per Share rose to $5.28 beating estimates of $4.51. However, stock trades 6.50% lower in the pre-trading hours due to Netflix announcing they will no longer confirm new subscriptions. Over the past hour, Proctor and Gamble as well as Amex also made their reports public. Since the releases both stocks have been trading lower.

When monitoring the performance of each component, 7 of the 25 most influential stocks trade lower. This indicates a downturn, but investors will also want the US session to mirror this. A positive factor for the US stock market is the US Dollar Index and US Bond Yields are trading considerably lower.

US Unemployment Claims also continue to remain considerably low and show the employment sector remains resilient. Thus, it is also worth noting the comments of the head of the FRB of Cleveland, Mrs Mester, who yesterday confirmed that lowering interest rates will become possible only when prices begin to move steadily towards the 2% target. The more restrictive Fed continues to be a problem for the stock market but may apply less pressure if next week’s major earnings data beat expectations.

Michalis Efthymiou

Market Analyst

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