We’ve been tracking the NASDAQ
100 Index ($^NDX) (represented by the ETF Invesco QQQ Trust ($QQQ) as a proxy for the market’s technical
picture. It contains many of the tech stocks that have been driving the economy
and market for the past year through these Covid times as well as for quite a
while prior – and likely to do so for some time to come.
There has definitely been some rotation out of this sector
of late as DJIA, S&P 500 and Russell 2000 logged new highs today. But we
would like to see confirmation with new highs in NASDAQ and NDX.
The NAS and NDX are still lagging, but today’s stronger
rally in the techs is encouraging. In this updated technical picture you can
see that as the NDX logged a 10% correction from its February 12 closing high
of 13807.70 to its closing low on Monday March 8 of 12299.08 it bounced off key
support just above 12200 (intraday low on Friday March 5 was 12208.39). Check last
week’s technical analysis post for reference to previous support levels
that were broken.
This 12200-level lines up with the October high which is
also the high of that W-123 swing bottom pattern we mentioned last week. Back
then it was key resistance that we cleared in late-November and early December.
It now forms key support and lines up with the uptrend line from the September
and October lows we discussed in our Almanac Investor December eNewsletter Outlook just
However, as the Ides of March are upon us, we must remind
you that the end of March has a propensity to decline, sometimes rather
precipitously as noted in the 2021
Stock Trader’s Almanac in the March Almanac and several places on pages
30-39. The Week After Triple Witching is often prone to weakness with DJIA down
22 of last 33 and the last few days often succumb to end-of-Q1 selling
pressure. If any late-March weakness materializes it should be a solid buying opportunity
for top-ranked April, the last month of the Best Six Months.