A Change of Character
Accumulation
As another trading week in 2023 comes to a close, it's clear that the bulls are still in control, with the Nasdaq leading the way. The Nasdaq pushed higher by over 4% last week, adding two additional follow through days on Monday and Thursday.
Before we dive into my full market analysis make sure you are subscribed so that you don’t miss any future updates!
One of the key indicators of a strong rally is institutional buying, and we've seen that in recent days. Starting from January 6th, 10 out of 15 days have seen positive closes on above average volume, and 5 of those days have been follow through days, which is a sign of serious demand. Another sign of a strong rally is when the close is higher than the open, and we've seen that happen 11 out of the last 15 trading days.
The Nasdaq also closed above its 200-day moving average for the first time since January 14th, 2022, and the market stop light indicator continues to show two green lights. This is an indication of the health of the market and is another way to show that there is broad participation in the market, rather than just heavily weighted stocks in the indexes influencing price.
The S&P 500 also had a golden cross take place this week, with the 10-week moving average crossing above the 40-week moving average. This is the first time since February 2022 that the moving averages have been aligned positively.
Overall, the action remains strong on the indexes and many individual stocks are acting well too. However, the S&P will likely have another hurdle at the 4100 level, where it got rejected from in December twice.
The market continues to show signs of strength and institutional buying, with the Nasdaq leading the way. After such strong moves, it's important to be precise with entries and not chase extended stocks.
The FOMC meeting is coming up this week as well, so a few days of consolidation before that would not be surprising and would actually be healthy, allowing moving averages to catch up to price.
For more analysis of the market and to see how I use the Market Stop Light indicator to help gauge the health of the market watch the video below.
Thanks for reading! If you enjoyed this article please help support my work by doing the following:
Follow me on Twitter @amphtrading
Share this post using the button below
The content presented is for informational and educational purposes only. Nothing contained in this newsletter should be construed as financial advice or a recommendation to buy or sell any security. Please do your own due diligence or contact a licensed financial advisor as participating in the financial markets involves risk.