The Rallying Nasdaq: Why It Could Be Different This Time
The Nasdaq-100 has been climbing for weeks and just finished its best month since April 2020. Will it stall and roll over like in April and early June, or is it different this time? Today’s chart shows some reasons to feel potentially more constructive about the current activity.
The first pattern is the price zone around 13,000. NDQ bottomed near this area in mid-March and stalled below it 11 weeks later. However in the last three days, prices have pushed above.
Next is the 100-day simple moving average (SMA). It was resistance in late March and early April. But this time, the index has muscled through it.
Third, the yellow histogram shows relative strength against the S&P 500 with a 21-day interval (roughly one calendar month). It recently had the greatest outperformance in a year – a big change from early 2022 when investors shed virtually everything associated with “growth.”
Also notice how MACD has been steadily climbing for over a month.
Macro conditions could also be changing. Oil hit a four-month low this morning and the Federal Reserve may have reached peak hawkishness. Some economic reports, especially purchasing managers indexes, have shown prices easing and supply chains improving. The result? Treasury yields are back to levels last seen in April.
The bears might be running out of arguments, especially with sentiment still highly negative.
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This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy. Any opinions expressed herein are those of the author and do not represent the views or opinions of TradeStation or any of its affiliates.
Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: https://www.tradestation.com/important-information.
The first pattern is the price zone around 13,000. NDQ bottomed near this area in mid-March and stalled below it 11 weeks later. However in the last three days, prices have pushed above.
Next is the 100-day simple moving average (SMA). It was resistance in late March and early April. But this time, the index has muscled through it.
Third, the yellow histogram shows relative strength against the S&P 500 with a 21-day interval (roughly one calendar month). It recently had the greatest outperformance in a year – a big change from early 2022 when investors shed virtually everything associated with “growth.”
Also notice how MACD has been steadily climbing for over a month.
Macro conditions could also be changing. Oil hit a four-month low this morning and the Federal Reserve may have reached peak hawkishness. Some economic reports, especially purchasing managers indexes, have shown prices easing and supply chains improving. The result? Treasury yields are back to levels last seen in April.
The bears might be running out of arguments, especially with sentiment still highly negative.
TradeStation has, for decades, advanced the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
Important Information
TradeStation Securities, Inc., TradeStation Crypto, Inc., and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., all operating, and providing products and services, under the TradeStation brand and trademark. You Can Trade, Inc. is also a wholly owned subsidiary of TradeStation Group, Inc., operating under its own brand and trademarks. TradeStation Crypto, Inc. offers to self-directed investors and traders cryptocurrency brokerage services. It is neither licensed with the SEC or the CFTC nor is it a Member of NFA. When applying for, or purchasing, accounts, subscriptions, products, and services, it is important that you know which company you will be dealing with. Please click here for further important information explaining what this means.
This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy. Any opinions expressed herein are those of the author and do not represent the views or opinions of TradeStation or any of its affiliates.
Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: https://www.tradestation.com/important-information.
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