Comforting 50 day SMA A Trap?
The Nasdaq lost 1.6% this week recording a bearish engulfing candle at all-time highs. To start the week it recorded a doji candle on Tuesday, which is adept at signaling fatigue or a possible reversal of the prevailing direction. The tech-heavy index also recorded a doji on 9/1. Add to that the feeling of the market starting to make a habit of fading late in the day, and a bearish tone starts to develop. Remember “amateurs open the market and pros CLOSE it” is the old adage. We remain steadfast with our 16000 target for year-end, and seasonality factors have a lot to do with what’s occurring. The other major benchmark that many do not associate with tech, but should be with the top 7 holdings (AAPL MSFT AMZN FB GOOGL GOOG TSLA NVDA) making up a quarter of the index is the S&P 500. It lost ground every day last week and is on a 5 session losing streak. Much of the weakness Friday in the S&P 500 came from AAPL which reversed hard falling more than 3% on daily volume not seen in 6 months. On the other hand, NVDA is carving out a bull flag pattern. I think once next week is over the overall uptrend could resurface for a strong move into year-end.