NAS100 Regains the Initiative after Fed & NFPs Boost

NAS100 Analysis

The Federal Reserve delivered its second rate hold in a row and adopted a less aggressive stance than previously. Two days later, the jobs report showed the addition of just 150,000 payrolls in October and an uptick in unemployment, to 3.9%. These events reinforced market expectations that rates have already peaked and sent NAS100 to a relief rally and its best week since March 2022.

They also allowed it to look past the poor quarterly results of Apple, which posted its fourth straight revenue decline, in the worst streak in twenty-two years. The index remains upbeat today, helped by the rise of another mega-cap. Tesla's stock was up in premarket after a Reuters report that the EV maker plans to produce a €25,000 car. ^[1]

Tesla has been slashing prices aggressively this year and along with tax credits, its vehicles have become more affordable. However, a cheap car is the Holy Grail and part of Elon Musk's original Master Plan from the distant 2006 ^[2], who during October's earnings call sounded downbeat around higher interest rates and the impact on demand. Back in March, executives had outlined a manufacturing process that leads to a 50% reduction in costs and 40% less footprint. This can likely allow the production of a cheap car, but there is nothing concrete. Other automakers are working towards a cheap EV, such as Volkswagen, which has announced an entry-level electric car, to be priced at just €25,000 by 2026. ^[3]

NAS100 has regained the initiative after last week's relief-rally. It tries to surpass a key confluence of resistances, which included the descending trend line for the 2023 highs and the daily Ichimoku Cloud. This would bring those highs (15,946) in the spotlight bit will need fresh catalyst to challenge them.

On the other hand, the Fed did not shut the door to more tightening and may need to hike again, given strong economy, high inflation and tight labor condition despite loosening. On the technical front, the RSI points to very overbought conditions and a pullback (given the upside hurdles) looks reasonable. Daily closes below the EMA200 (14,800) would put NAS100 in a precarious positions, but sustained weakness does not look easy under current conditions.