Friday ended with both the Nasdaq and the S&P 500 posted their first weekly decline in four weeks. Each kept their year-to-date gains above 12%. And both indexes also undercut the low of their Aug. 4 follow through days. A key difference is that, in addition, the Nasdaq ended Friday's session below its 21-day exponential moving average, while the S&P 500 managed to hold narrowly above that key technical line of support.
That means, according to IBD Senior Market ****** yst Mike Webster during Friday's Stock Market Today video, that this is a very tricky time. The undercut by both indexes negates the follow through day that turned the rally attempt into a confirmed the uptrend. (The uptrend remains intact unless an index cuts below the first up day of the rally attempt, which occurred July 30.)
But the Nasdaq's close below its 21-day line also puts it in limbo with regard to what IBD defines as a power trend.
A power trend is a robust set of market circumstances which improve the odds for investors. Webster describes a power trend as "a state of the market where you trade differently...it allows you to be more aggressive longer." But the Nasdaq's undercut waved a caution flag.
"You can't have a power trend on the Nasdaq anytime soon," Webster says, "because you need that low above your 21-day for 10 consecutive days. So we need at least a couple of weeks before that can happen."
#above
That means, according to IBD Senior Market ****** yst Mike Webster during Friday's Stock Market Today video, that this is a very tricky time. The undercut by both indexes negates the follow through day that turned the rally attempt into a confirmed the uptrend. (The uptrend remains intact unless an index cuts below the first up day of the rally attempt, which occurred July 30.)
But the Nasdaq's close below its 21-day line also puts it in limbo with regard to what IBD defines as a power trend.
A power trend is a robust set of market circumstances which improve the odds for investors. Webster describes a power trend as "a state of the market where you trade differently...it allows you to be more aggressive longer." But the Nasdaq's undercut waved a caution flag.
"You can't have a power trend on the Nasdaq anytime soon," Webster says, "because you need that low above your 21-day for 10 consecutive days. So we need at least a couple of weeks before that can happen."
#above
2 months ago
