Nasdaq stocks haven't done this for 3 months
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Jason Goepfert
Published: 2021-11-10 at 07:35:00 CST
For the first time in months, the momentum in securities traded on the Nasdaq exchange has turned positive.
After a furious rally to start the year, so many stocks were churning that breadth on the Nasdaq couldn't surpass its highs at the start of the year. By mid-summer, it turned outright negative and stayed there until last week.
This has ended a streak of 77 days in negative territory for the Nasdaq McClellan Summation Index, among the longest streaks since the end of the Global Financial Crisis.
Only 6 other periods saw the Nasdaq's Summation Index stay in negative territory for longer. After those streaks ended, the Nasdaq Composite gained an average of nearly 19% at some point within the next year.
What's especially notable about the current flip to positive momentum is that it triggered as the Nasdaq Composite was on a run to new highs. Since 1986, there have been 8 similar signals.
What else we're looking at
- How the Nasdaq performed after other times the Summation Index turned positive
- Why context matters when momentum turns positive
- Using the 17 level in the VIX as a line in the sand
- What relative performance in the Russell 2000 is signaling about future returns
| Stat box More than 1/3 of Technology stocks are now overbought, according to their Relative Strength Index (RSI) readings. After the 58 other days that showed such a broad level of overbought stocks, the XLK fund showed a flat average return over the next month. |
Etcetera
Chile is hot. Over the past week, the Optimism Index on the ECH fund has soared to 85%. Other bouts of extreme short-term optimism have tended to occur after protracted downtrends, ultimately leading to higher prices over the next 6-12 months.
BTFD in Discretionary stocks. The XLY Consumer Discretionary fund has enjoyed an average inflow of more than $100 million per day over the past week, despite the price pulling back in recent days. This is the largest 5-day inflow of 2021.
Time for Treasuries. The price of 10-year Treasury note futures has mostly followed its typical seasonal pattern (the path, not the magnitude). If it continues, prices should continue to rise into December.
Related Posts:
- Weekly Wrap for Jan 14 - Surge in defensive sectors and value stocks, Energy surge, dollar drop
- Four reasons not to give up on tech just yet
- Internal momentum has surged in defensive sectors
- The McClellan Summation Index for defensive sectors nears a record
- Weekly Wrap for Jan 7 - Breadth thrusts, sentiment reversal, Nasdaq suffering, energy rally
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The post titled Nasdaq stocks haven't done this for 3 months was originally published as on SentimenTrader.com on 2021-11-10.
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