3/09/2023H Marketlistens to Fed Chair’s comments and Shivers and takes Significant Drop
THE MARKET’s MESSAGE: Nasdaq and S&P500 50-day are holding close to their 200-day lines extending sideways action, showing indecision.
What causes a market that went into an Uptrend just 5 days ago, to fall back into an Uptrend under Pressure?
Many causes but the key numbers that drove the change were the significant drops in all three major indexes.
Look at the 25.7% rise in the volume of the NYSE (Used for the S&P500 and the DJIA) resulting in their day having a Major Distribution (sell off) day.
On Thursday, the Nasdaq index had a bigger drop than the other DJIA and S&P500 and its volume was lighter. (I suspect IBD is still working out the data interface with NewsCorp – especially the volume.)
>>>Remember: One bad (distribution) day does not a Downtrend make!
After the Nasdaq’s 20.1% amazing rise in January, I’m not surprised the index has pulled back 7.1% to its 50-day moving average line today. I will watch to see if it falls further or has found support for the third time this year. I certainly like that the Nasdaq did not dropped below its 50-day line.
As I noted Monday night, the Nasdaq index is outperforming the S&P500 by more than a factor of 2 to 1 this year! And the index continues riding above or at its 50-day moving average red line.
On the MARKET ACTION table below note:
· The last 12 trading days (shown in the table above) have only 2 accumulation days and only 1 distribution day (today!).
>>>>>Those low counts mean 8 days were neither accumulation (buying) days ordistribution (selling) days showing INDECISION about the health and future of this market.
On the MARKET FACTORS, COUNTS &RATINGS table below, note there are few GREEN boxes –Market Direction ofUPTREND and the Nasdaq’s A Accumulationrating and Nasdaq is the only index above its 50-day moving average line (by atleast 2%),
When you look at the last 4 weeks of the ACCUMULATION/DISTRIBUTION RATINGS table BELOW, what do you see happening?
>>>>>You should notice the percent of top rated stocks (A or B rated stocks) has DROPPED IN HALF while the D and E rated stocks have ALMOST DOUBLED. Thattells you there is a ROTATION going on.
NOTE: A long time ago, I learned (after paying for this lesson multiple times…..) I learned two important lessons:
1. I am NOT smarter than the market. And,
2. The market does not care about my “fine” opinion.
Wishing you, “Many Happy Returns.”
CharlotteHudgin, The Armchair Investor, (214)995-6702