NASDAQ New High/New Low Ratio and Risk
Stuck is a word we have used a lot lately.
Some common synonyms for stuck are jammed, trapped, put, pushed, and caught.
Nasdaq is stuck, jammed, or whichever word one wishes to use. And that’s price. Traders are also trapped and caught, considering that the market breadth is stuck in the middle between healthy and ill.
Our Big View product updates the market internals each day. This particular indicator shows the number of stocks reaching a new 52-week high relative to the number of stocks falling to a new 52-week low. A degree of finesse is required to read the current high/low ratio.
On a short-term basis, we were starting to get to oversold levels in NASDAQ. The 10-Day moving average (red line on the middle chart) flipped positive, meaning this February decline may be starting to turn up. Meanwhile, the 21-DMA (black line) is above 50%. When the value of the 21-DMA is above 70%, it is considered bullish, with over 85% being very bullish. When it is under 30%, it is considered bearish, very bearish under 20%. While NASDAQ got oversold on a shorter-term timeframe, the longer-term bias remains intact, as long as the 21-DMA is at or above 50%.
We are watching for a potential powerful bounce in NASDAQ, hence, bringing price back towards the higher end of the trading range and the 21-DMA closer to 70%.
Please also look at the bottom chart or the actual up/down ratio. On Monday, the 27th, there were an even number of red and green bars. In the weeks prior, the stocks going up outpaced the number of stocks going down. Now, once this market breadth chart updates, should the green bars rise above the red ones, then that is yet another positive sign for growth stocks and NASDAQ. And of course, the opposite is true-more red than green means market could remain stuck.
To see more of our Big View indicators and the breakdown of risk on/neutral/off, please check out our Sunday Market Outlook.
Finally, we featured Century Aluminum CENX in yesterday’s Daily, and it is up nearly 7% today.
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S&P 500 (SPY): 390 support with 405 closest resistance.Russell 2000 (IWM): MA support around 184. 190 has to clear.Dow (DIA): 326 support, 335 resistance.Nasdaq (QQQ): 300 the pivotal area, 290 major support; 284 big support, 300 resistance.Regional banks (KRE): 65.00 resistance, 61 support.Semiconductors (SMH): 228 support, 240 pivotal 248 key resistance; 248 resistance, 237 then 229 support.Transportation (IYT): 235 resistance as best Mod Fam performer, 228 support.Biotechnology (IBB): 125-130 new range.Retail (XRT): 66-68 huge area to hold if the market still has legs.
Director of Trading Research and Education