2023-10-13F UPtrend Day 6 – The Uptrend uncertain – Nasdaq falls below its 50-day line!

October 15, 2023

2023-10-13F  UPtrend Day 6 – The Uptrend uncertain –Nasdaq falls below its 50-day line!

Friday, the market fell on higher volume on day 5 of the NEW UPTREND. Yes, the bad news is that price-volume action Friday a distribution day of selling.

Note on the Nasdaq 9-month chart below….. Yes, the major indexes lost ground
Friday, but I am encouraged that the last two weeks showed 10 rising days and only 2 down days.

The Nasdaq continues to rise, step by step. And the Nasdaq continues to out-perform the S&P500 which is outperforming the poor DJIA.The Nasdaq did have a slight disappointment with lower volume Wednesday while the NYSE volume rose showing market interest in safety this slower moving index– slower rises can also translate to slower loses.

Note: IBD is offering a very timely FREE seminar:

·      SMARTER SELLING STRATEGIES on Tuesday, October 17@ 1:30 p.m. central time (of course, you can join IBD seminars from any time zone. You may have to call them to get a registration link.  When I put my link in, their system thinks I am trying to register again. If you are a subscriber, registering should be easy when you type in the name of the webinar. If not, please call them at directly at

I am interested that the Nasdaq has made such a consistent rise over the last 3 weeks. But should you be concerned about the low volume on the recent rising days?  Based on many low-volume days over the last 2weeks and the rebuff of the Nasdaq back below its 50-day moving average line, I suspect the market is not going to be successful in an immediate new run-up.

And on Thursday – the market had a distribution day (a down day on higher volume)as the Nasdaq took a 1.2% dip below its 50-day moving average line. Is this just a slow October transition into the end f the year?

Friday was a second drop in a row for the Nasdaq, but volume slipped lower.

After three months with two lower lows and two lower highs, I will not get in the QQQ (or TQQQ) until I feel the supportive volume of this rise.

In Investor’s Business Daily’s Friday BIG PICTURE, David Saito-Chung explained:

“As you follow the Nasdaq’s moves in the chart above…, since the July high, the Nasdaq has dropped twice and recovered some of those losses before diving again over the last 2 days.

TAKE NOTE:  The above chart shows you how many downtrends form.  They don’t just drop,drop, drop.  They drop some….. then other traders may see the lower price as a bargain and jump in…. pulling the price back up.  Repeat.

Thus since the middle of July, we have had 2 downtrend periods and 2 partial recoveries.  And “partial” is the keyword here. Since the high near the start of August:

·       The 2 lows were “lower lows” and the highs after those lows were also “lower highs!”

·       Traders sometimes say, “The market fell lower and lower with the traders fighting it all the way down.”

But look closer at the volume on the price recoveries (rises.)  If you examine the  volume on the recovery days, you won’t see higher volume on the way up. That is a HINT that the OVERALL PUSH IS TO THE DOWNSIDE.  

The last high is not yet a “high.” It will be a high if the Nasdaq price continues down.  But no uptrend goes up every day….. and no downtrend goes down every day:

·       Do you see the aspect of the Friday price move that warns that Thursday’s high may have been the start of dip number 3?

Answer: Friday was a significant dip (-1.2%) which closed near the bottom of the day. That drop is where the traders went when faced with 2 days of not being able to trade(Saturday and Sunday.)

 

On the 20-DAYHISTORY OF THE NASDAQ (below), the market is still in an Uptrend, but I really want to see a few more accumulation days (when price and volume rise together) to have any confidence that the market is near a low.

>>> When will the Nasdaq pop its head back above its red 50-day moving average line? It could be Monday but when I saw the Nasdaq drop 1.2% and close near that low, I suspect the dip is NOT OVER.. The Nasdaq rose 8 of the last 13 days…. and only one day (Thursday) fell with higher volume to create a distribution day. Friday took quite a dip (-1.2%) but the volume was light. Stay tuned.

Note:  On my tables like the one above and below, you will see the red boxes have white lettering in them. Why? Because RED is a “fully saturated”color which means if you printed this presentation out on a black and white printer and I had not turned the numbers white, you would simply see black letters on black boxes. If that doesn’t make sense, call me or your printer-savvy friend.

Now look below at the NEW UPTREND on the MARKET FACTOR, COUNTS & RATINGS table below. Wow! look at all the green!


 

>>> I am looking for a rise in the market after the recent 2 1/2  month correction. But we sure did NOT get that rise on Friday.

A good way to verify that positive movement would be to see the rightmost column in the WEEKLY ACCUMULATION/DISTRIBUTION RATINGS of STOCKS table below (labeled ”A+B”) continue moving higher as it did Friday.

>>>CAN YOU SEE THE UPTURN IN THE STOCK BUYING OVER THE LAST WEEK? The count of A and B rated stocks rose from 24%a week ago to 28% Friday. (a mild upturn.)  I am NOT EXCITED about a new Uptrend, yet.

When the number of stocks with A or B ratings rise, I know there are more buyers than sellers and money is flowing into the stock market.

But Friday’s 4% increase is not enough to get excited……yet. Stay tuned!

One additional “Word to the Wise”…

>>>>>--- MOST MARKETS FALL FASTER THAN THEY RISE so give this market some time to reclaim (and beat??) its prior highs.!  

Please send questions, comments,suggestions, ideas and requests to:   My text message account at(214) 995-6702.

Wishing you, “Many Happy Returns.”

Charlotte  Hudgin, The Armchair Investor,                                              

www.ArmchairInvestor.com   (214)995-6702   

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