2023-10-17T UPtrend Day 8 – The market fell hard Wednesday. The Nasdaq volume was +4.5% fora MAJOR DISTRIBUTION day.
The Uptrend remains uncertain Wednesday. Both the Nasdaq and S&P500 appear stock below their50-day moving average lines!
The Nasdaq continues to out-perform the S&P500 which is outperforming the poor DJIA.
On the daily chart below, notice that the volume also dropped as the price dropped from the 2023 high of 1719 (vertical dashed line) but the volume started 2 weeks earlier, showing an exhaustion occurring after the 5 month run-up to that July top,
On the daily Nasdaq chart below, look back at the exciting runup the Nasdaq had after the 4th of July up to the July 19th high. But where was the volume during that final runup?
On the Nasdaq daily chart below, note the series of lower highs while the volume has been flat for over 2 months.
Although the Nasdaq is 7.8% below its July 2023 high, this major index has risen 4.4% in the last 2 weeks and is now stalled at its falling 50-day line. This is a classic case of a “lower low” and does NOT yet show sign of rising right now.
I WILL SELL my QQQ position AT THE THURSDAY OPEN and wait in cash...
The following section is a repeat of the weekend, It struck me as the appropriate analysis for this market which has dipped twice recently
FROM THE WEEKEND ARMCHAIR INVESTOR NEWSLETTER: a GOOD LESSON IN MANAGING YOUR PORTFOLIO IN A SLOW DOWNTREND.
“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 4 of the last 5 days.
TAKE NOTE: The above chart shows you how many of the 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. But the downward correction may continue.
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.
Note: Friday was a significant dip (-1.2%)which closed near the bottom of the day.
Monday was a small recovery that did NOT hold as the Nasdaq was flat on Tuesday. The Nasdaq then took a large gulp down on Wednesday on higher volume (a distribution day.)
! I’m glad I am getting out of the QQQ at the Thursday open.
BOTTOM LINE FOR ME ON THIS WEDNESDAY’S MOVE:
I have recovered about half of the Nasdaq drop off the July high in the last 3 weeks. This week, the QQQ is dropping again so I am selling the QQQ at the Thursday open.
NOTE: Sometimes CASH is the best position.
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.
Note: On my tables like the ones 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.
Look below at the NEW UPTREND on the MARKET FACTOR, COUNTS & RATINGS table below. Wow! Only two ratings are green, the count of Nasdaq UP Days. and the3 indexes are all above their 200-day moving average lines. This is a market that is slowly lower. (After the big runup earlier this year, I am not surprised.)
The count of A and B rated stocks rose from 22% 2 weeks ago to 33% today, I am NOT EXCITED about a new Uptrend….. yet…. BUT I AM WATCHING HOPEFULLY...
The 6% RISE in As + Bs over the last 2 weeks is encouraging…. but the QQQ still sits on its 50-day line in a 6-day sideways huddle!
Those birds just aren’t going anywhere!
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.