The NASDAQ finally moved beyond its 50-day moving average and resistance that’s acted like a lid since
the end of April. Bullish is the way to describe Wall Street’s recent outburst past the index’s 50-day benchmark.
However, prices eroded at the end of last week and to start this week, but the tables turned, previous
resistance now becomes support. The 50-day average should attract buyers instead of sellers now that
the NASDAQ is trading above the trendline.
That means investors might be wise to consider the current bout of profit taking as a buy the dip
opportunity, especially if the NASDAQ gets closer to 11,505.48. Not only is it the 50-day average, but it is
a double-layer of support as it coincides with the rising trendline that connects the bottoms of the
current rally.
As long as the NASDAQ stays above the rising trendline, the index should continue to walk up the stairs,
a rally, followed by some profit taking, followed by another rally that extends past the previous rally’s
high. It’s just like a staircase, the next step up is higher than the previous step. That is the definition of a
bull market, although it’s too early to make that call.
Index investors might consider adding an index exchange traded fund (ETF) like Invesco QQQ Trust
(QQQ). The good news is that we’ll keep downside limited to a close below $290 in event the current
rally is a head fake. QQQ trades at $300.27 as we type.
The NASDAQ should bounce higher if it hits the double support level at the 50-day mark. The index
might make it to 12,250 before heading into technical trouble.
SECTOR WATCH
With the overall market appearing to be on solid footing at the moment, it’s not surprising to see
technology-based industries at the top of our performance leaderboard. The web, semiconductors,
cloud computing, multimedia tech and online retail were all in the top 10.
According to our look at  ARK Next Generation Internet ETF’s (ARKW) chart, the ETF could be a decent
swing trade in the short-term and offer plenty of upside if the market’s rally has any endurance. In the
near-term, ARKW should have support around $50 and resistance at $60. If ARKW can make it past $60,
it could move higher in $5 increments to $70 without a lot of technical trouble between $60 and $70.
ARKW is focused on technology infrastructure companies from the cloud to enabling mobile, new and
local services, such as companies that rely on or benefit from the increased use of shared technology,
infrastructure and services, internet-based products and services, new payment methods, big data, the
internet of things, and social distribution and media.
STOCK WATCH
Hope for the best but be prepared for the worst is the theme we are operating under at the moment.
Teladoc Health, Inc. (TDOC) is the 7 th  largest ARKW holding. Shares of the Health Information Services
provider are trending higher after crashing at the end of April. Shares entered open space created by a
gap down in price from April 27’s close of $55.99 to the open of $31.56 on the 28 th .
After the initial waterfall drop, TDOC shares rallied to $40 and then traded mostly between $27.38 and
$40 until the end of June. Teladoc has been bound by $39ish on the bottom and $45 on the top for all
but two days in July.
If TDOC closes to the good side of $55, it has limited resistance at $50, but could find its way back to $55
without much technical trouble. On the downside, a close below $38 is where we’d consider cutting
losses.
