The NASDAQ Composite Index has been following the descending 20-day exponential moving average since the start of the year, and last ran into resistance at the line last week. On Friday the index ran into resistance at its 10-day moving average after gapping up on news that Russian President Vladimir Putin had stated that discussions with Ukraine "have taken a positive turn." NASDAQ 100 futures shot up over 200 points in pre-open action, but the gap-up open soon turned tail. That created a bearish outside reversal for the NASDAQ Composite on higher volume. The market remains in a severe downtrend, although intraday volatility has been maddening at times, particularly within the context of absurd news items that have been sold into. Rallies since the late January low have been consistently sold into as the rallying cry of BTFD now becomes STFR.
The Market Direction Model (MDM) remains on a SELL signal.
Semiconductors Applied Materials (AMAT), Lam Research (LRCX), and Qualcomm (QCOM) were first reported on as short-sale targets back in January. They has since trended lower along their 20-day exponential moving averages, not unlike the NASDAQ Composite.
SunPower (SPWR) was reported on as a possible short-sale target along the 50-day line last week, but the stock quickly moved above the 50-day line on energy fears this past Tuesday, stopping out any possibility of a short-sale. The move has carried as far as the early January highs where it encountered resistance on Friday and reversed. This may become a secondary short-sale entry zone where the high of Friday is used as a covering guide. This is a bit tricky since the move has been entirely based on some idea that higher gas and energy prices that working-class individuals can scarcely afford now will cause them to suddenly spend money installing solar panels on their homes. We do not think this will pan out, hence this move now offers a news-oriented short-sale opportunity, if one is able to identify proper potential areas of resistance, such as was the case on Friday with the early January high.
This remains a market for nimble swing-traders and short-sellers as we have pointed out since the early part of 2022. For those not oriented towards this type of trading and who prefer to take a trend-following approach, the market remains in a downtrend and therefore the Market Direction Model has been profitable on its sell signal, or alternatively, staying on the sidelines where cash is king may also be suitable for certain members.