First Quarter Ends on a High! Will Up Trend Continue?

As we ended the first quarter of 2023, the indices experienced an important technical week last week, surging to multi-week, and in some cases, multi-month highs. Nasdaq’s Composite Index notched its biggest quarterly percentage gain since June 2020, closing at its highest level since last September 12th, with the Semiconductor group leading the way and the Nasdaq 100 climbing to a 7-1/2 month high, as well.

During the first quarter, Semiconductors were among the quarter’s strongest performing stocks, with the Philadelphia semiconductor index rising 27.6%! In addition, the broad-based S&P 500 closed at its highest level since February 15th, with a strong weekly performance of +3.5%.

However, to get confirmation of those indices price actions, the Transportation (TRAN) and small cap indices, (as measured by the IWM Russell 200 ETF), need to play catch up as they currently trail and remain UNDER their respective 50-day moving averages!

Underlying technical breadth was excellent during most sessions last week, with advance/declines, up/down volume and new high/new low ratios strong, confirming the strength of the rally.

Looking forward, the Nasdaq 100 (NDX) strength continues to lead and currently has its next technical target near overhead resistance from the August 2022 high near 13,865. The S&P 500 (SPX) shows resistance and its next technical target at the 4275-95 zone.

While the McClellan Oscillator, a measure of overbought/oversold, is near 180 and overbought, I believe it is a sign of a strong thrust in the market that may have initiated a new intermediate uptrend! It often gets quickly overbought and remains in that condition, perhaps, for weeks as indices extend their trends.

We’ll soon see if the indices have enough strength to do so.

In any case we’ll certainly keep you posted as to what may come at TheTechTrader.com.

Harry Boxer
Veteran Trader, Analyst & Founder of
TheTechTrader.com

Sharp Move Off Key Technical Support

Last week’s sharp reversal higher came right where it technically really needed to on Thursday. The move off pullback lows near S&P 500 at 3928 and Nasdaq 100 at 11830 came off key support and popped through four-week falling wedges with a thrust that took out their 10-, 21- and 50-day moving averages as well! Last week also saw technical confirmation for the rally back with new high/lows ratio about 3 to 1 positive with strong up/down volume as well.

Friday saw the strongest performance as the S&P 500 closed up +1.61%, the Dow Jones Industrials Index closed up +1.17%, and the Nasdaq 100 Index closed up +2.04%. 

A decline in bond yields on Friday supported a rally in technology stocks as the 10-year T-note yield fell 9 basic points to 3.965%. Bond yields fell back on carryover support from Thursday when Atlanta Fed, President Bostic, said the Fed could be in a position to pause rate hikes by mid to late summer. 

Market sentiment also improved as strength in China’s economy sparked a rally in the Shanghai Composite to a 7 1/2 month high on Friday that provided carryover support to world equity markets. 

Weekly group strength was lead by the materials sector + more than 4%. Other leading groups were Communications Services +3.3%, Industrials +3.2%, Energy and Information Technology Groups, both +2.9%. 

Sharp moves off key technical support, such as we just experienced historically, often lead to strong follow-through moves, and I fully expect that we should see that this coming week. However, this market has been quite volatile and much harder than usual to analyze due to many exterior influences, such as FOMC comments and actions. It will require flexibility and continual re-evaluation of technicals going forward. 

I will certainly be keeping TheTechTrader.com members appraised of any important changes as they occur!

Remember: “Trade what you see NOT what you think.”

Harry Boxer
President & Founder, TheTechTrader.com

Can Overhead Resistance Be Taken Out?

Last week the indices initially failed to get a strong enough follow through to the prior week’s rally and suffered a strong pullback retest. However, they managed to hold initial KEY technical price and moving average support on Thursday and surged back nearly 2% on Friday, finishing mixed with a small gain for the week on the Nasdaq 100 and just a small loss for the S&P 500.

All eleven S&P 500 sectors closed with a gain on Friday. Communication services (+4.0%) led by a wide margin thanks to Netflix and Alphabet. Other top performers on Friday were the information technology (+2.7%) and consumer discretionary (+2.5%) sectors, reflecting renewed interest in the mega cap space.

By the close on Friday, advancers led decliners by a 4-to-1 margin at the NYSE and a nearly 3-to-1 margin at the Nasdaq. The strong surge back left both the S& P 500 & Nasdaq 100 just below their 1-year declining channel tops resistance lines. As a result, next week may be a critical one as the indices need to prove themselves with a breakout thrust to possibly complete important bottoming patterns and extend the rallies off their early month lows.

Key and leading sector ETFs such as SMH (Semiconductor), FAS (Financial) and XBI/LABU (Biotech) have developed BULLISH basing formations that could lead to important rallies in the next few weeks, if overhead resistance not too far away can be taken out.

That certainly remains to be seen, but nevertheless encouraging. Of course, we’ll keep you posted going forward at thetechtrader.com.

Remember: “Trade what you see NOT what you think.”

Harry Boxer
President & Founder, TheTechTrader.com

Start of a New Intermediate Uptrend or a Rally Back to Resistance?

The Indices had an important technical week last week, following through to the VERY strong upside
reversal that occurred on Friday, January 6th. The Nasdaq 100 was higher all 5 sessions and closed the week at the highs going away, aided by strong performances from large cap components AAPL, AMZN, MSFT, NVDA, NFLX and TSLA. That index gained nearly 500 points for the week! The S&P 500 also followed through nicely and managed to close near 4,000, gaining about 100 points for the week.

Advance/Decline ratios were quite positive and confirming the trends. Now the indices have overhead objectives near resistance to deal with at NDX 11,800 and 12,100 levels. The SPX resistance appears to be at 4,050-53 and near 4,100.

The 13-14-month declining tops lines lie just ahead and are important levels to take out if this market has designs on much higher levels. However, for now, many underlying indicators, including the McClellan Oscillator percent of stocks over their 40-day moving averages and the VIX volatility index, are short-term overbought and/or near key overhead historical resistance levels.

The KEY to action going forward is the interpretation of whether or not the conditions are a result of an initial thrust that starts a new intermediate uptrend or just another rally back to resistance in a bearish overall downtrend. We should be getting answers to that question in the next days and weeks. The near-term action going forward may tell the tale of where this market wants to go.

The markets appear to be at a crossroads here, so pay close attention to what is revealed next week. Of course, as always, I’ll keep you posted with my thoughts at thetechtrader.com.

Remember: ” Trade what you see, not what your think”.

Harry Boxer, President & Founder​​

TheTechTrader.com

Is a Sharp Rally in the Horizon for the Start of 2023 or Will They Sink Even Further? 

The indices ended the year with a weak performance in the last week, finishing down on the SPX & NDX for 3 of the last 4 sessions, with the worst annual performance since 2008! Final results show the Dow Jones Industrial Average: -8.8%, S&P 500: -19.4%, Russell 2000: -21.6%, Nasdaq Composite: -33.1%.

What is worse, the patterns that formed over the last 2 weeks appear to be BEARISH continuation patterns and do not augur well for a strong start to the new year. In addition, the McClellan Oscillator finished near neutral at -6.37 and certainly NOT OVERSOLD by any means. The percentage of stocks that remain BELOW their 40-day moving average remains at 62.5%

Mega cap stocks and former market leaders, Nasdaq Generals, continue to show bearish patterns with many of them finishing the year at or near KEY technical support levels, even though some of the same mega cap names that drove the downside moves ended up closing with gains because of a very late rally back to close out the year.

Apple (AAPL 129.93, +0.32, +0.3%), Tesla (TSLA 123.18, +1.36, +1.1%), and Meta Platforms (META 120.34, +0.08, +0.1%) were among the winning standouts for the group. Notwithstanding the positive finish for these names, they still lost 26.8%, 65.0%, and 64.2%, respectively, in 2022. Combined individual violations of their close support levels could result in a nasty start to 2023, unless we get an almost immediate sharp rally off the current levels.

The first 10 days of the year often indicate how the year might go by historical standards but based on their earlier November rally and lack of a year end “Santa Claus” rally, there is no telling whether the early action in 2023 will be an indicator this coming year.

Remember to “Trade What You See NOT What you Think” in 2023 and stay tuned to TheTechTrader.com for future technical direction and advice.

A HAPPY and prosperous NEW YEAR to all from TheTechTrader.com team!

Harry Boxer, President & Founder​​

TheTechTrader.com