The NASDAQ bounced sharply from its prior support level around 14200 last week. The dip buying crowd successfully plugged the hole. Now it looks like the NASDAQ will march on to attempt 16000 in the next 4-6 weeks. Underneath the raging indices, there has been a rolling correction since early 2021.
Last week the NASDAQ took the lead when the market bounced back from the May 19 low, but the bounce didn’t come with any enthusiasm, meaning the volume was anemic. The 10-year treasury yield has come down, yet the NASDAQ is hardly rising accordingly. When the mega tech reported fabulous Q1 earnings, the market shook it off. That was the telling message for the summer.
The NASDAQ (mainly supported by the big tech) broke out on the first day of April and continued to rally quietly last week. The DOW and S&P 500 continued to make all time highs while the VIX dropped below the pre-pandemic level. From the stock market point of view, COVID-19 didn’t happen. Or it happened, but it was quickly erased from memory.
The DOW closed at 30606.48 at the 2020 year end which is bullish but not in a breakout position. In order for the DOW to be in a breakout position, it had to close above 31291 to carry the market higher with momentum. The S&P 500, NASDAQ and small cap Russell 2000 index are all in confirmed
The wall of worry is real. The non-stop news coverage about the election, virus aid package negotiation and the resurgence of the virus in the coming flu season can attest to the validity of the worries. Yet, the market has had its own mind ever since the March 2020 low. It just kept going higher without all the worries.
