Thursday, February 19, 2009

NASDAQ Internals Weakening



I meant to post this chart the other day but I forgot to so I'm posting it now intra-day while the market is still open. Above is a chart of the NASDAQ and in the lower panel is the advance/decline line. You'll notice on the last move up in the NASDAQ the A/D line showed significant bearish divergence and is now very close to taking out the low from last November. This tells me that the majority of stocks in the NASDAQ have NOT gone higher from January 20th to February 9th. The rally in the NASDAQ was fueled by a few heavily weighted stocks such as GOOG and AAPL.

I think we'll see the NASDAQ begin to fall apart here even though it has been stronger than the S&P and Dow. Be careful on the long side.

4 comments:

Anonymous said...

Kevin,

Can you please provide info on where/how this chart is plotted? On stockcharts, I can get the lines running up an ddown but not the smooth line that you have drawn. Also, the value for 2/19 is -907 while you have something like -2506 (granted it is intra day). Any reason, for such difference, given the market sold off at the close?

Kevin said...

Type in the symbol and then run a cumulative line of the data. You can select "cumulative" from the drop down menu.

To answer your second question I think the values differ because I'm running a cumualtive total while you are just looking at the raw data.

David Parizek said...

And then would you think AAPL and GOOG will follow suit, in a laggerdly way?

Kevin said...

I think GOOG and AAPL will sell off but that's a risky trade. The first time we see the market bounce, those two stocks will probably rally more than the market which might make it difficult to stay short. The financials are a better and safer short in my opinion.

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