Chart of the day - US100 (19.05.2022)

Wall Street slumped yesterday with S&P 500 and Nasdaq dropping more than 4%. This was the worst Wall Street session in almost 2 years! Concerns over economic outlook are intensifying. Earnings reports from major US retailers showed that consumers are weakening while reports from other sectors showed that higher inflation is biting into margins and depressing profits. On top of that, Cisco Systems said that it expects revenue to drop in the current fiscal quarter (May-July 2022). Cisco missed revenue expectations in its earnings report for fiscal-Q2 (January-April 2022), triggering an over-10% drop in after hours trading. Company said that sales were negatively impacted by Chinese lockdowns that exacerbated supply chain issues. This is important as those will also be reflected in Q2 earnings reports of other companies and may magnify downward pressure on the markets when Q2 earnings season begins (early-July).

Taking a look at Nasdaq-100 (US100) at H4 interval, we can see that the index has been trading in a narrow downward channel since early-April 2022. A test of the upper limit of the channel was made by the end of Tuesday but bulls failed to break above. This is an important technical development as the area was also strengthened by the upper limit of local market geometry. As a result, short-term downward trend was maintained. Attention has now shifted to the 11,600 pts area, where the lower limit of the channel can be found.

Source: xStation5