The Rallying Nasdaq: Why It Could Be Different This Time

The Nasdaq-100 has been climbing for weeks and just finished its best month since April 2020. Will it stall and roll over like in April and early June, or is it different this time? Today’s chart shows some reasons to feel potentially more constructive about the current activity.

The first pattern is the price zone around 13,000. NDQ bottomed near this area in mid-March and stalled below it 11 weeks later. However in the last three days, prices have pushed above.

Next is the 100-day simple moving average (SMA). It was resistance in late March and early April. But this time, the index has muscled through it.

Third, the yellow histogram shows relative strength against the S&P 500 with a 21-day interval (roughly one calendar month). It recently had the greatest outperformance in a year – a big change from early 2022 when investors shed virtually everything associated with “growth.”

Also notice how MACD has been steadily climbing for over a month.

Macro conditions could also be changing. Oil hit a four-month low this morning and the Federal Reserve may have reached peak hawkishness. Some economic reports, especially purchasing managers indexes, have shown prices easing and supply chains improving. The result? Treasury yields are back to levels last seen in April.

The bears might be running out of arguments, especially with sentiment still highly negative.

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