Dow Jones Index defends support as breadth metrics stall in no-mans land.
I didn't mention this yesterday, but the Dow Jones Industrial Average has managed to defend breakout support, continuing to do so today. While other indices fluff their lines, there is still a buying opportunity for this index. While the index hs undercut its 50-day MA, one day's worth of gains would be enough to regain it. While today's volume registered as accumulation, the 'hammer' candelstick, paired with yesterday's, has the potential to be a tweezer bottom assuming a higher finish tomorrow.
The other index to watch is the Semiconductor Index. This index is an important belwether for the Nasdaq and Nasdaq 100. The Semiconductor Index did manage a strong rally today, but that only brought it as far as former resistence, resistance that could stall this nascent recovery. The CCI indicator has climbed out of an oversold state (although a technical 'buy' for this index is a cross above 100). Even if it manages to breakthrough tomorrow, it will soon find itself challenging converged 20-day and 50-day MAs.
If there is a warning sign, it's that Nasdaq breadth metrics are caught in a no-mans land and therefore vulnerable to further losses. This could be the start of a more protracted decline, at least until the percentage of Nasdaq stocks on point-n-figure 'buy' signals, and above their 50-day and 200-day MAs, reaches an oversold state. Optimists could argue it's someway from becoming overbought, but realistically, looking at a chart that has delivered a 13 year rally, to see a decline that could go into 2024 after peaking in 2021, is not unreasonable, nor should be seen as surprising.
As an investor, we are in the 'hold' part of the investment. Markets aren't overbought enough to consider profit taking or covered call selling, but neither are they oversold enough to suggest buying would deliver good value.
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Investments are held in a pension fund on a buy-and-hold strategy.
