Is A/D Line Signally Late-February Weakness?
Posted: 18 Feb 2021 02:43 PM PST
Back on January 21 in our February
Almanac post our Market Probability Chart highlighted the pattern of
late-February seasonal weakness. A disappointing jobless claims number today
appears to be the straw the sent the market lower. In this chart of the NASDAQ
100 Index (NDX) I have overlaid the NASDAQ Composite Advance/Decline Line. The
NASDAQ A/D Line peaked and flattened out about six trading days ago and is now
heading lower.
This coincides with the seasonal pattern of late-February weakness.
However, we expect recent support to hold above 13,000. Should that level be
breached major support exists around the old September doji high of 12,240.
Considering how far the market has come in the face of some formidable economic
and pandemic obstacles and how frothy sentiment had become, a little
consolidation and pullback is to be expected.
We may see some further weakness into month-end and into
March, but with vaccine rollout gaining some traction, more stimulus likely and
a supportive Fed we do not expect any major selloff at this juncture.
