Power Trend On
Market Strength Broadens
This week saw a welcome change as market participation broadened, the Nasdaq composite staged a fresh follow through day, and also triggered a Power Trend. Â For weeks now, money had been flowing into big tech making the indexes appear to be stronger than they were, however, under the hood, we had seen net lows and few stocks pushing higher with the indexes.
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Despite the collapse of banks and money flowing into meg caps, the action in high quality growth stocks remained promising as many set up great risk to reward pivots. This week, those that were diligent in keeping a list of stocks displaying relative strength and carefully watching price action were rewarded.
One of the key elements that had been missing throughout the last year was the number of high quality stocks to buy. Sure, there were a handful of stocks that had nice runs like CELH, ENPH and SWAV, but that was it and everyone was watching the same names. If the market is going to move higher we need broad participation from many stocks in many different sectors and that is what we are seeing now.
Along with stock participation, we might finally have the missing ingredient of the CAN SLIM methodology, the M or market. This week the Nasdaq staged a follow through day which is a gain of 1.25% or more with volume greater than the previous day and on top of that also triggered a Power Trend, which signifies a time when a strong trend could be building.
Using Market School principals from Investors Business Daily, we quickly saw the exposure count go from 0 to 6 in a matter of days. Something that doesn’t happen often as we triggered a Power Trend so close to the follow through day.
At this point in the cycle, it does seem like we are almost out of this bear market and a new bull could finally be upon us soon if not already. Looking at the weekly chart of the Nasdaq, the way I see it is we had 3 waves down, followed by a retest of the lows and now a higher low as we build a base. Where we go from here remains to be seen, but with this weeks action I see no reason to not be bullish.
To see how individual stocks acted this week, and set ups I will be watchin going into next week watch the video below. I also review follow through days and the criteria for a power trend.
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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.