Nasdaq Composite: Internal measure hits hurdle, now what?
U.S. equity index futures green: Nasdaq 100 up ~1%
Jun national activity index 0.05 vs 0.18 prior (0.23 revised)
Euro STOXX 600 index up >1%
Dollar edges up; bitcoin up ~1%; gold slips; crude down ~1%
U.S. 10-Year Treasury yield dips to ~4.21%
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NASDAQ COMPOSITE: INTERNAL MEASURE HITS HURDLE, NOW WHAT?
It's been a rough week or so for the Nasdaq composite .IXIC. Since its July 10 record closing high, the tech-laden index ended Friday down about 5% in just seven trading days.
Meanwhile, amid recent signs of broadening/rotation, one measure of the Nasdaq's internal strength, the Nasdaq New High/New Low (NH/NL) index had been defying the composite's recent weakness.
However, the NH/NL index appears to have reached a critical juncture in that it may have stalled on Friday just after it flirted with a resistance line from its early 2023 high:
After bottoming at 31.8% on July 2, this measure rose 11-straight days, ending at 73.6% last Thursday, which was its highest level since late December of last year. With this, the measure nearly tagged the resistance line from early February 2023 which presents a hurdle at around 74.5%.
On Friday, the NH/NL index ticked down to 72.3%.
Thus, it now remains to be seen if Thursday's resistance line test marks a significant high for this measure. If so, internal weakness may once again intensify, especially if the NH/NL index breaks its rising 10-day moving average, which ended at 56.4%. Indeed, in the absence of a mega-cap resurgence, the composite may then be vulnerable to a much greater decline.
On a breakout above the resistance line, which may underpin a greater rotation, and renewed strength in the composite, the NH/NL index's December 2023 high was at 76% and its February 2023 high was at 79.2%. Early-to-mid 2021 highs were in excess of 90%.
(Terence Gabriel)
*****
FOR MONDAY'S EARLIER LIVE MARKETS POSTS:
SMALL CAPS COULD KEEP GOING - CLICK HERE
ARE THE DAYS NUMBERED FOR JULY'S ROTATION TRADE? - CLICK HERE
WHY A SOFT DOLLAR POLICY IS DIFFICULT - DEUTSCHE BANK - CLICK HERE
STOXX AT THE OPEN: AIRLINES GROUNDED, TECH UP - CLICK HERE
EUROPEAN STOCK FUTURES RISE, SHAKE OFF BIDEN - CLICK HERE
WALL STREET IN MEASURED MOOD AS BIDEN BOWS OUT - CLICK HERE
NasdaqNHNLI07222024 https://tmsnrt.rs/3ShHCUo
(Terence Gabriel is a Reuters market analyst. The views expressed are his own)
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