2023-10-19H UPtrend Day 8 – The market fell hard Wednesday.The Nasdaq volume was +4.5% for a MAJOR DISTRIBUTION day.
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 dropping 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? (Missing) And also note the series of lower highs while the volume has been flat for over 2 months (NOT a strong statement about lack of broad market support.)
Notice on the QQQ chart below, the QQQ (Nasdaq largest 100 stocks without the slower financials) is showing a July rise then an Augst-September-October slow drop. That 3-month QQQ retreat (and you can see a similar drop in the Nasdaq index in yesterday’s newsletter), is NOT showing signs of letting up. I do NOT hold the QQQ at the moment.
I am in CASH.
I SOLD my QQQ position AT THE THURSDAY OPEN and wait in cash...
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 seethe lower price as a bargain and jump in…. pulling the price back up a bit. But the downward correction may continue.
Since the middle of July, we have had2 downtrend periods and 2 partial recoveries. And “partial” is the key word 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.
BOTTOM LINE FOR ME ON THIS THURSDAY’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 sold the QQQ at the Thursday open as I said in Wednesday’s newsletter.
NOTE: Sometimes CASH is the best position.
If you look at a 20-day HISTORY of the NASDAQ table below, you will see a relatively short UPTREND period we just went through.Yes, a new uptrend is exciting. But which lasts only 7 trading days and had 5of the last trading days as falling days with 4 of them distribution days of heavy selling, you’ll have to wonder whether this Uptrend should even have a “yellow”rating of Uptrend under pressure.
>> Perhaps just one more 1%+ down day will wake the market up to the failure of the recent (and short) Uptrend.
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.