Another Rare Feat
3 Follow Through Days In A Row
A busy week of economic data and mega cap earnings was met with strength as the Nasdaq marched higher by over 3%. Â While price action remains strong, the Nasdaq managed a very rare feat that has only happened a handful of times in history, having 3 follow through days in a row.
This rare occurrences of 3 follow through days in a row has only happened 4 other times since 1999. 6/30/1999, 1/11/2001, 4/2/2009 and 11/5/2020. All of these with the exception of 2001 lead to substantial price gains.
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Getting back to what we are seeing today, the indexes as well as many individual stocks are starting to become extended after a few weeks of big gains. It would be very normal and healthy to see the indexes pullback here in the range of 3 to 5% from Thursdays high. Thursdays high also lines up right with the September peak of a weak 2022 rally attempt. A few days of consolidation here would allow moving averages to catch up to price, and stocks to set up low risk entry points.
On top of the Nasdaq bumping up against an area of resistance, the dollar and interest rates closed the week strong on the back of a very hot jobs number and any continued strength next week could lead to more market weakness.
The dollar reclaimed it’s 21 day exponential moving average and has room to run up into a declining 50 day moving average.
The 2 year yield reclaimed its 50 day moving average for the first time since before the January 6th follow through day and the 10 year yield is back above it’s 21 day exponential moving average with room to run to its 50 day moving average as well.
While the market still remain very data dependent, the overall price and volume action has me optimistic about more upside.
Below is a video I made a video recapping all the trades I took in the month of January as well as what I was seeing on the indexes that had me looking for trades to the long side. Â
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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.