To The Moon

So far this year, we have seen a strong rebound in technology stocks. In 2022, technology stocks have been among the best performers in early 2023 amid a soaring dollar and expected Fed rate hikes and tougher austerity actions. However, this rebound was halted by Friday's U.S. jobs data, which came in at nearly 2.5 times market expectations, while the unemployment rate hit a 50-year low. Traders are now carefully considering whether this means the Fed will remain tough on interest rates as the economy is clearly coping better than expected with the current tightening.

With that in mind, the focus now turns to Powell, who will be speaking at the Economic Club of New York, and I think the market is more cautious about the Fed's expectations for interest rate policy because of the excellent U.S. economic data. This could have an impact on technology stocks, as the high interest rate environment could affect company profitability and stock prices. Therefore, the market will pay close attention to Powell's speech today to determine the specific direction of the Fed's interest rate policy.

Risk of hawkish remarks

Behind Friday's data, the main risk now is whether Powell will take a tougher stance. While the FOMC saw the Fed reaffirm its commitment to continue raising rates, Powell's comments on inflation caused the market to begin to end tightening expectations early and rates to begin to be priced down through the end of the year. However, I think that since the economic data is clearly holding up well, the Fed may now decide that it has time to keep pushing rate hikes to lower inflation more quickly, which could see the dollar continue to soar in the near term, pulling down tech stocks again. However, if there is no significant change in the Fed's toughness, traders may see it as a "green light" to start buying tech stocks again.

To write some technical analysis, the surge in the $NASDAQ Composite Index.US took the index up to a test level of 12,875.84. For now, the rally has stalled here as momentum has waned. However, I think the focus will remain on an eventual breakout above the current high, even though the index remains above the 12220.22 level. If it is below 12220.22, then we move to the next support point at 11540.72.

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