2/23/2023H Nasdaq bounces off its 200-m.a. line but volume shows hesitation.
THE MARKET’s MESSAGE: Nasdaq and S&P500 50-day line are holding close to 200-day lines clearly showing an extended sideways period.
For Thursday, I remind you that every market has periods of indecision…. pauses in the market action such as happened on Tuesday, Wednesday and Thursday as both the Nasdaq and S&P500 dropped off their recent highs to pause near their 200-day moving average lines. Lower volume pointed at market makers’ indecision.
At the end of the day, all three major indexes were up, with the Nasdaq again leading the way. Thursday was a nice reminder that, overall, the Nasdaq is the long-term winner in the major index corral.
What do you observe when you look at the Nasdaq and S&P500 Relative Strength (RS) lines? ….. Even as the S&P500 was rising this year, its RS line fell. You don’t have to pull out a calculator when you see the dichotomy between the two major indexes. The Nasdaq’s Relative Strength(RS) line is rising this year, while the S&P500’s RS line has taken a serious tumble.
The Nasdaq’s +0.7% rise Thursday may not seem like much more than the S&P500’s 0.5% gain, but add the Nasdaq’s bigger gains day after day and you will probably do what I do …… run away from the S&P500, putting my trending-following position in the QQQ (and sometimes in the TQQQ - triple QQQ fund.)
Note the concentration of RED boxes on the following table, showing a growing slow down after the recent period of rising days.
Looking at the last 5 Nasdaq days above makes me pause.
Beside the recent 3 distribution days in a row, note the Nasdaq dropped to its 200-day line on Wednesday and again on Thursday, but did closeabove that moving average line on both days. I am concerned that the volume was the lowest in a month and a half on those two days. What is this market waiting for?
Staying on the high side of the 200-day m.a. line is agood sign but with weak volume, I am not betting it predicts the future,… yet. A Nasdaq close back above 12,000 again would probably be the signal to buy some more of the QQQ as long as the volume kicks back in.
As always, at the bottom of the MARKET FACTORS table –the major indexes ARE STILL BELOW THEIR HIGHS of 2021-2022 and are,THEREFORE, annotated in Red . (They almost always will be above recent lows.)
>>>>> BOTTOM LINE: This market may has taken a “breather,” given back some of the recent gains and is now resting on the200-day m.a. line, but below the recent 12,000 Nasdaq high. That’s OK with me. The Nasdaq’s current 2-day low (about 11,400) was in the range of many of the highs in the prior quarter. Stay tuned!