Nasdaq composite: Lagging internal strength remains a red flag
Main U.S. equity index futures modestly red
Mortgage Market Index 212 vs 210.4 last week
Euro STOXX 600 index down ~0.8%
Dollar, crude up; gold dips; bitcoin off ~0.8%
U.S. 10-Year Treasury yield rises to ~4.28%
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NASDAQ COMPOSITE: LAGGING INTERNAL STRENGTH REMAINS A RED FLAG
The Nasdaq composite .IXIC rallied more than 1% on Tuesday to end at 17,717.654. With this, the tech-laden index ended a three-day losing streak, and closed less than 1% below its 17,862.232 June 18 record closing high.
But traders continue to fret over a lack of internal strength. Indeed, breadth has been especially weak. In fact, on Tuesday, the Nasdaq daily Advance/Decline line ended at a fresh record low.
Another measure of internal strength, the Nasdaq New High/New Low (NH/NL) index also remains on the back foot:
Looking back over the past year or so, this measure diverged ahead of the Nasdaq's two biggest sell-offs, which began in July 2023 and March 2024.
More recently, the NH/NL index diverged again. After peaking at 73.3% in early March, it then topped at 68.2% around mid-May.
On Tuesday, this measure finished at 38%, or its lowest level since May 3. It's also spent 20 of the past 21 trading days below its now descending 10-day moving average, which on Tuesday finished at 41.8%.
Thus, traders are on edge as it's an open question as to whether the IXIC can continue to defy the internal weakness.
The NH/NL index has a support line from its October 2023 low which is now around 22% and the April 2024 low was at 17.7%. The support line from early 2020 is now around 6%, and the October 2023 trough was at 4.8%.
If this measure can reverse back above its 10-DMA, and its June 13 high at 45.5%, it may suggest a reprieve as burgeoning internal strength may then add confidence in the sustainability of the composite's rise.
However, the resistance line from early 2021, which now resides around 73%, may remain an especially stiff barrier.
(Terence Gabriel)
*****
FOR WEDNESDAY'S EARLIER LIVE MARKETS POSTS:
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INVESTORS ARE CHEERIER THAN AT THE START OF 2024 - CLICK HERE
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HERE'S 10 FUN FACTS ABOUT ASIA MARKETS FROM HSBC'S 'FLYING DUTCHMAN' - CLICK HERE
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IXICNHNLI06262024B https://tmsnrt.rs/4bjo8p8
(Terence Gabriel is a Reuters market analyst. The views expressed are his own)
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