As Nasdaq nears its highs, traders wait with bated "breadth"

Reuters

As Nasdaq nears its highs, traders wait with bated "breadth"

2024 10월 18, 오후 12:56 GMT

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Nasdaq 100, S&P 500 futures higher, Dow dip

Sep building permits < est ; Sep housing starts ~flat with est

Euro STOXX 600 index up ~0.2%

Dollar, crude dip; gold gains; bitcoin up >1%

U.S. 10-Year Treasury yield edges down to ~4.08%

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AS NASDAQ NEARS ITS HIGHS, TRADERS WAIT WITH BATED "BREADTH"

The Nasdaq composite .IXIC is now down around 1.5% from its record highs. That said, the tech-laden index is on track to rise for a sixth-straight week, which is something it last did in the week it set its record peaks in mid-July.

With this, one measure of the Nasdaq's internal strength, the daily Advance/Decline (A/D) line .AD.IXIC, is once again battling key resistance:

For more than a year, this Nasdaq breadth measure has been consistently failing at the resistance line from its late-2021 high.

In fact, the four most severe sell offs over this period that began in July 2023, and March, July, and August of this year, were accompanied by the A/D line flirting with or testing this line, only to then see it breakdown, and ultimately fall to new lows.

Thus, traders are on edge as they wait to see whether this breadth measure can finally breakout above the resistance line. In the event this barrier is decisively taken out, it may signal a significant trend change for the breadth measure, leading to a more sustained broadening of Nasdaq strength.

Conversely, if the A/D line fails, and falls to fresh lows, it may be accompanied by composite instability, especially if Magnificent Seven names are unable to pick up the slack.

Meanwhile, on Wednesday of this week, the NYSE daily A/D line ended at a fresh record high.

(Terence Gabriel)

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