There is a point when running on a treadmill where you feel like you are close to hitting your goal for the day, only to look at the monitor and realize that you are at the halfway point. The clock really seems to slow down for a minute or two while you dwell on “how long this is taking.”
It becomes a decision point, for some ‘it’s good enough’ settles in and they reach for the treadmill’s stop button, while others run on for the full time.
Much like the tired treadmill runner, the NASDAQ is at a decision point. The index has started its run higher after a 10% correction. Investors could turn off the caution switch before the bearish clock runs out because where we are now is “good enough.” After all, the DOW is setting new highs, right?
We’d love for the painful run for the NASDAQ to be over, but there is still time left on the technical clock. However, there are reasons to be optimistic.
As you can see on the chart below, the Mary of the Markets (where the NASDAQ goes the others are sure to follow), has rallied off a near-term bottom creating a nice “V” shape but there is still work to be done. Sellers could show up when the index reaches 13,350 ish. That’s where it stalled before heading into correction territory. If buyers can’t push prices definitively past resistance, then a test of the recent low might become a reality. Set a new, near-term low and it gets outright dangerous for bulls.
That’s the worst-case scenario, but as we mentioned up top, there are reasons for a chart watcher to be optimistic.
- It’s been our experience that small “Vs” are the first step in completing larger “Vs”, which would take the NASDAQ back to its 52-week high.
- A bullish moving average crossover, known as a MACD in Wall Street lingo. The last time we saw a similar pattern, stocks moved higher from the election through mid-February.
- Relative strength moved from below to above a reading of 50. That means there is plenty of headroom for the index to head higher before becoming overbought.
If Wall Street can push and close NASDAQ above 13,400, then investors might consider adding an index exchange traded fund (ETF) like Invesco QQQ Trust (QQQ).
Technology and marijuana were the dominate sectors/industries on our performance leaderboard. If the NASDAQ stays on the treadmill and finishes its work of completing the larger “V”, then tech stocks should rally hard. Invesco Dynamic Software ETF (PSJ) could have the most ground to cover and ETF investors looking to add tech to their portfolios, might consider the software fund.
It’s not sexy, but if we are going to go software, then Microsoft Corporation (MSFT) might be a decent, blue-chip tech name worth considering. Shares look poised to head higher on its stock chart and Director Emma Walmsley recently bought $1 million of the tech giant’s stock. (1) It’s not usual to see million dollar buys with mega-cap stocks. Investors who are considering blue-chip tech to their accounts might follow Walmsley as MSFT might be a good fit.
1 – https://www.secform4.com/insider-trading/1795429.htm