Market Analysis and Summary
The NASDAQ and Russell 2000 was where the strength was on Friday. However, the NASDAQ fell shy of reclaiming its 50-DMA, while the Russell 2000 shook out constructively below its 200-DMA. The S&P 500 and DOW exhibited stalling action, despite closing up on the day. Volume declined across the board, leaving the distribution count at 7 days on the NASDAQ and 3 on the S&P 500.
Between earnings season and last week’s sharp drop on the major indexes, we have seen some recent leaders fall by the wayside. However, not yet in a manner that raises concern. So far, the action among the market’s leading groups of growth stocks is healthy and normal, given the current state of the market. It will be interesting to see if the NASDAQ and S&P 500 can quickly recover and join the DOW back above their 50-DMA’s, or continue lower to join the Russell 2000 near their 200-DMA’s. Only time will tell.
So, as we discussed in the prior report, other than well bought positions that have generated enough profits to handle a potentially deeper correction from here, cash is king. In the meantime, maintain a list of the leading stocks that hold up the best while the general market corrects/consolidates. Remember, it is the action of these stocks that always provide the most valuable clues.
NOTE: Check when a company is due to report EPS, before initiating a position. These dates change frequently and sometimes at the last minute, so double and triple check to be sure.
The NASDAQ rose 0.64% and closed near its high for the day, although volume declined and it fell shy of reclaiming its 50-
The Russell 2000 shook out constructively below its 200-DMA, finished the session up 0.12% and closed near its high for the day, although volume declined.
The S&P 500 started off strong, but slowly faded for the remainder of the session and closed near its low for the day, as volume on the NSYE declined.
The DOW started off strong, but slowly faded for the remainder of the session and closed near its low for the day, although it held above its 21-DMA for the second day in a row and volume declined.