This Is The Index I’m Watching On Friday
Thursday Recap:Â Â For
the most part the major indices a good day — with the exception of the cash
Dow. On Thursday the Dow started by testing the 9900 level. When buyers
couldn’t sustain a move over this level, sellers took the market to test support
at 9800. At the same time the Dow was testing support, S+P was testing support
at session lows. When these levels held, buyers took the S+P into positive
territory on the day, while the Dow was once again the laggard, down some 21
points on the day.Â
The NASDAQ was once again
the strongest index. You will recall that in our prediction from Monday,
October 18 we noted that the NAS could test the 200-day moving average before
the elections. It looks like that is happening. I’ve posted the exact chart
with annotations that was posted on the 18th with the addition of
recent price action. Leadership from the tech sector is important factor
underpinning this market. However, will the NAS back off as it approaches the
200-day MA?
Prediction for
Friday: We’ll likely end this week by testing resistance at 9900 on
the cash Dow again. If (or when) the markets can break this level its going to
get interesting for market bulls, and a confirmation of the start of a 4th
quarter rally will occur when the Dow breaks the 20-day EMA, currently just
above 10,000. But the real index I’ll be watching on Friday is going to be the
NASDAQ. Recent tech leadership is providing clues that point to a strong rally
occurring once the uncertainty of the election is behind us. It also points to
a bottom in the market being formed. For Friday I’m going to expect the NAS to
test the 200-day and potentially back off. However, if the NAS clears the
200-day its going to provide clues as to significant strength in this market.
Portfolio Strategy:Â Right
now we’re delta positive. If we break 9900 to the upside we’ll likely to get
additionally positive. However, if we break and hold under 9800 we might
lighten up a little.Â
Mark Melin