Nasdaq and the Overall Market: Interpreting Three Consecutive Bullish Days and Interest Rate/Employment Indicators
The Nasdaq recently rose 0.66%, marking three consecutive bullish candles, which suggests a potential short-term trend reversal. Generally, two to three straight bullish candles indicate accumulating buying pressure and are often interpreted as signals of a shift toward an upward trend. Meanwhile, the recently released PPI (Producer Price Index) is based on September data, meaning the time lag limits its immediate impact on market volatility.
The more critical variables are employment indicators and the resulting expectations for rate cuts. The recent ADP employment report showed a decrease of 13,000 jobs, which pushed the probability of a December rate cut up to about 80%. Considering the Federal Reserve’s stance and Chair Powell’s comments, economic indicators appear to be moving into a softening phase. The market is actively pricing in the possibility of a December rate cut and liquidity injection, creating a favorable environment for stocks—especially growth and tech sectors.
Federal Reserve Liquidity Injection Scenario and Market Shaking
The rising likelihood of a December rate cut is not merely a monetary policy event; it coincides with liquidity held in the TGA (Treasury General Account) gradually returning to the market. Recently, small-cap and thematic stocks have experienced abrupt declines similar to the crash in March. This may be an intentional pre-adjustment move by the Fed and policy bodies to shake the market before major rate cuts and large-scale liquidity injections.
Many stocks have undergone deep corrections to their 200-day moving averages, followed by three consecutive days of rebound—this can be seen as a signal of correction completion and potential trend reversal. If the Nasdaq breaks through major resistance levels, it can be interpreted as a clear trend reversal with a strong possibility of revisiting previous highs.
Shift in Leading Sectors: Software → Semiconductors → Cloud (Google)
Software once led the market, and in the second half of this year, semiconductors showed strong momentum. Currently, large cloud/AI stocks such as Google are leading the market, indicating that within a single AI cycle, leadership sectors can shift each quarter. Therefore, detecting which sector will lead the AI theme after Google is crucial for investment success.
Additionally, the U.S. 20-year Treasury bond has turned downward after forming a peak. Bond prices and stock prices tend to move in opposite directions, so further declines in bond prices may create a favorable environment for the stock market, particularly for the Nasdaq and small-cap/thematic stocks.
Gold Chart Observation: Cup and Handle Pattern Interpretation
The gold chart is showing signs of forming a cup-and-handle pattern, and breaking the previous high could lead to further upside. One notable characteristic is that gold appears to be regaining momentum without a broad decline, suggesting the possibility of independent strength amid interactions between the dollar, bonds, and equities.
Individual Stock Outlook: Palantir · Ethereum · Broadcom · Tesla · Aeye Ren · Russell 2000
Palantir continues to rebound from its main support line, with a low likelihood of breaking downward. It appears to have completed its complex correction following the April low and may resume its upward movement. Ethereum has posted five consecutive bullish candles, signaling a confirmed bottom. If it breaks out above the upper resistance of its falling channel, it may enter a clear trend reversal with rapid price acceleration—positively affecting related sectors such as mining, infrastructure, and gaming.
Broadcom is currently experiencing a pullback near the top of its base range, but a breakout with a strong bullish candle could mark the end of its second wave correction and the beginning of a third wave. In the semiconductor rotation market, Broadcom is expected to remain a leading stock.
Tesla has broken its upper resistance, easing prior downward pressure and opening the possibility of continuing its third-wave upward trend. If it breaks above the previous highs in its base zone, it could rise quickly through an area with limited supply. Aeye Ren appears to have exhausted downward momentum within the $49–$45 range and may transition into a new upward trend.
The Russell 2000 index has maintained its main support and posted three consecutive strong bullish candles—an indicator of a confirmed trend reversal. A recovery in small-cap and thematic stocks seems likely soon, and if the Russell 2000 surpasses its previous high, a stronger rally than the last one could follow.
Investment Highlights and Risk Management
First, the Nasdaq’s three consecutive bullish days suggest a possible trend reversal, but confirmation requires breaking major resistance. Second, if expectations of a December rate cut and liquidity release materialize, growth, tech, and small-cap sectors could benefit significantly. Third, when investing in individual stocks, it is important to check index direction (Nasdaq, Russell, S&P) first and monitor sector rotation signals (e.g., after Google → semiconductors → cloud). Fourth, always be mindful of the risks of sharp movements due to options/futures positioning and major interest-rate or geopolitical news.
