I wrote in my Morning Brief on Wednesday that I saw some signs that the bottom was in. The first sign was that the VIX could not make new highs for the year. This is significant because they basically have a double top over the past two years (48.00 this years high; 48.11 last years high). Failure to take out that double top was bullish action for the stock market.
The Transports came within striking distance of last years low (3,872) and then quickly turned higher. The Transports went from leading us lower to leading us higher. The Nasdaq failed to take out a low from August (2022.25) that the charts were showing could be a breaking point for the Nasdaq. The Dow Industrials were inside last summer’s range and started to look ugly and then they took off to the upside closing back above that range (10,808). All of this action is bullish but we are not out of the woods yet.
This week I will be focusing in on the Nasdaq. Even though the Transports are the leader of this market the Nasdaq is currently at a more critical area. I think that in order for the market to sustain this rally the Nasdaq has to sustain trade above their 150 day smooth moving average (2181.63). If they cannot then I think that we could drift back down and possibly test the recent lows. We may chop around the 150 day smooth moving average, but it is important that they do not spend too much time below it.
I will also be watching the S&P cash; I want to see if they can get back above their 50 day moving average (1177.87) and their daily down trend at 1177.01. If they can get back above this area then I think that we could see a nice pop in equities across the board. If they cannot get back above this area then I think that we will sell off.
For my day to day thoughts sign up for a free 7 day trial of the morning brief. Have a great week.
Moving Averages; Black (10 day), Blue (20 day), Green (50 day), Pink (200 day) Purple (150 day smooth avg.). Horizontal Lines; Blue (High of the year), Red (Low of the year), Green (Unchanged for the year, Black (last summers range)
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| $NQ_F |
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| $DJT |
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| $SPX |
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| $VIX |
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