AI
| Followers | 689 |
| Posts | 143817 |
| Boards Moderated | 35 |
| Alias Born | 03/10/2004 |
Friday, February 08, 2019 4:06:55 PM
The Nasdaq stock market index may have missed an ‘all-clear’ signal
By: Cboe Blogs | February 8, 2019
The tech bellwether has failed to rebound 20%, a level important in technical analysis
The Nasdaq Composite Index, the bellwether for technology stocks, rose 19.5% from Dec. 21 to Feb. 5 after a long decline. A 20% gain is commonly considered to be the end of a bear market.
The Nasdaq COMP, -0.56% missed that mark by only half a percentage point. Would a 20% rally have triggered an “all clear” signal?
In this century, the Nasdaq rallied 20% (after first losing at least 20%) six other times. Those instances are highlighted via the green lines below.
Nos. 1, 2 and 3 occurred in the middle of the 2000 tech crash, and led to further losses.
No. 4, in November 2002, was the beginning of a new bull market.
No. 5, in December 2008, was followed by one more low.
No. 6, in March 2009, was the beginning of a new bull market.
It’s a small sample size, but one of three 20%-plus rallies started new bull markets. (Two of three did not.)
In the 1980s and 1990s, similar rallies consistently led to further gains.
At its February high, the S&P 500 SPX, -0.59% gained 16.4%, the Dow Jones Industrial Average DJIA, -0.81% rose 16.6%, and the Russell 2000 RUT, -0.63% increased 19.99%.
Potent bundle
Interestingly, the 20% rally mark coincides with another popular bull/bear line in the sand: the 200-day simple moving average (SMA).
The chart of the Nasdaq-100 ETF QQQ, -0.60% shows the 200-day SMA (171.6) and 20% mark. The 20% mark happens to be close to the December high (technical resistance).
Fibonacci aficionados will point out that the 61.8% Fibonacci retracement level is at 171.70. Bear market rallies commonly retrace around 61.8% of the prior losses.
Summary
Statistically, there is no real significance to the 20% rally point. However, this time around, the 20% point coincides with the 200-day SMA and the 61.8% Fibonacci retracement level.
The resistance cluster at 171.6-172.2 seems therefore worth watching. The Nasdaq-100 ETF QQQ, -0.60% support (green lines) is around 165.5.
In order for a pullback from resistance (171.6-172.2) to gain momentum, price must at minimum fall below support (about 165.50).
The Nasdaq-100 ETF appears also to be completing a five-wave rally (according to Elliott Wave theory). The implications of this, along with a bearish (for stocks) VIX setup and the most bullish long-term factor are discussed here.
Read Full Story »»»
• DiscoverGold
By: Cboe Blogs | February 8, 2019
The tech bellwether has failed to rebound 20%, a level important in technical analysis
The Nasdaq Composite Index, the bellwether for technology stocks, rose 19.5% from Dec. 21 to Feb. 5 after a long decline. A 20% gain is commonly considered to be the end of a bear market.
The Nasdaq COMP, -0.56% missed that mark by only half a percentage point. Would a 20% rally have triggered an “all clear” signal?
In this century, the Nasdaq rallied 20% (after first losing at least 20%) six other times. Those instances are highlighted via the green lines below.
Nos. 1, 2 and 3 occurred in the middle of the 2000 tech crash, and led to further losses.
No. 4, in November 2002, was the beginning of a new bull market.
No. 5, in December 2008, was followed by one more low.
No. 6, in March 2009, was the beginning of a new bull market.
It’s a small sample size, but one of three 20%-plus rallies started new bull markets. (Two of three did not.)
In the 1980s and 1990s, similar rallies consistently led to further gains.
At its February high, the S&P 500 SPX, -0.59% gained 16.4%, the Dow Jones Industrial Average DJIA, -0.81% rose 16.6%, and the Russell 2000 RUT, -0.63% increased 19.99%.
Potent bundle
Interestingly, the 20% rally mark coincides with another popular bull/bear line in the sand: the 200-day simple moving average (SMA).
The chart of the Nasdaq-100 ETF QQQ, -0.60% shows the 200-day SMA (171.6) and 20% mark. The 20% mark happens to be close to the December high (technical resistance).
Fibonacci aficionados will point out that the 61.8% Fibonacci retracement level is at 171.70. Bear market rallies commonly retrace around 61.8% of the prior losses.
Summary
Statistically, there is no real significance to the 20% rally point. However, this time around, the 20% point coincides with the 200-day SMA and the 61.8% Fibonacci retracement level.
The resistance cluster at 171.6-172.2 seems therefore worth watching. The Nasdaq-100 ETF QQQ, -0.60% support (green lines) is around 165.5.
In order for a pullback from resistance (171.6-172.2) to gain momentum, price must at minimum fall below support (about 165.50).
The Nasdaq-100 ETF appears also to be completing a five-wave rally (according to Elliott Wave theory). The implications of this, along with a bearish (for stocks) VIX setup and the most bullish long-term factor are discussed here.
Read Full Story »»»
• DiscoverGold
Information posted to this board is not meant to suggest any specific action, but to point out the technical signs that can help our readers make their own specific decisions. Your Due Dilegence is a must!
• DiscoverGold
Join the InvestorsHub Community
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
