Complexion Change?
Will Thursday’s action prove to be something sinister going forward for the major averages? My take is something feels different this time around, famous last words. My belief is that the Nasdaq will hit the very round 20000 number by the end of 2024, but I think it will take a detour lower in the near term. If one is to look at the seasonality during the last several years for the Nasdaq July has averaged a gain of 5.6%, and at the intraday highs last week it was higher by 5.3%. And looking at the next 3 months between August-October advances have been muted or none at all with September seeing a loss of nearly 7% dating back to 2020. The WEEKLY chart should give one cause for concern with the doji candle, although that same candle the week ending 6/21 did not bring about the fatigue or possible trend change that they often forewarn. Bulls will maintain the break above the 3-week tight pattern (weeks ending 6/14-28 all CLOSED within just 44 handles of each other) the week ending 7/5 that added 3.5% (holiday-shortened weeks historically tend to be positive) has legs and I am still constructive on markets but think a tactical drawdown of 3-5% is a possibility before a late year resumption of the rally.