Very little has changed with the major indexes since the last report. The NASDAQ’s current rally attempt remains intact, yet under heavy pressure. Since the follow-through day on 8/13, the NASDAQ has yet to reclaim its 50-DMA, which is proving to be solid resistance for the tech-heavy index.
Additionally, rallies up to this point have come on below average and declining volume, while sell-offs have come on heavy and increasing volume. This action is exactly the opposite of what we are looking for.
Remember, a big distribution day occurred on 8/14, the day right after the NASDAQ followed through. Studies have shown there to be about a 95% chance that a follow-through day will fail when this happens. So, the recent action isn’t all that surprising.
Fortunately, leading growth stocks remain in significantly better shape than the general market, which is exactly what we want to see. Nevertheless, until the headline risk and wild volatility abates, progress will likely be difficult at best.
So, continue to keep track of the strongest stocks in the strongest groups, with the best fundamentals. However, until we start to see clear evidence of strength and accumulation on the major indexes, we would keep exposure to a bare minimum, if not 100% cash.
The NASDAQ has been living below its 50-DMA since it followed through and has yet to rally on heavier volume, which is not at all constructive.
The Russell 2000 has been living below its long-term 200-DMA since the NASDAQ followed through and has continued its pattern of lower lows.
The S&P 500 has been living below its 50-DMA since the NASDAQ followed through and has yet to rally on heavier volume, which is not at all constructive.
The DOW has been trading well below its 50-DMA since the follow-through day occurred and seems to be struggling to hold above its long-term 200-DMA.
Buy COUP on a big volume move through $148.00, with a sell stop at its 23-EMA. (Price Alert: $148.00)