Nasdaq Heating Up? Weekly Nifty 9

Research Report Excerpt #1

The typical April return has been good, but not great. Over the past 10 years, April has been only the eighth-strongest month of the year, with a 0.9% median SPX return. Since 1991, though, the median April return has been 1.3%—the fifth-best month of the year:1

Chart 2: S&P 500 (SPX) median April returns, 1991–2020. S&P 500 historical performance. 5th-highest monthly return.

Research Report Excerpt #2

Just so we’re clear, Finom Group is not forecasting a 10%+ correction, we’re simply outlining the probabilities and encouraging investors/traders to maintain and/or adopt appropriate expectations. Truth be told, a double-digit correction in Q2 2021 would prove quite the opportunity with respect to the average year 2 gains of a new bull market cycle, at 16.9 percent. Let that sink in for a second and do the math…

7% YTD + – 10% = -3%

-3% + 19.9% = 16.9%

Speaking of analogues, or making a segue, while the current SPX is in nearly perfect sync with the 2009-10 Roadmap, it remains more than 4 percentage points above it because it started at a lower point coming out of the bear market. It still appears that it may encounter some upside resistance near-term, just about the time Q1 earnings season gets underway. But as always, past performance is certainly no guarantee of future results. Remain flexible and open to a wide variety of outcomes, even as the analogue has proven a tremendous guide.

Research Report Excerpt #3

In using breadth indicators to suggest the potential for more upside near-term in the Nasdaq, I think we can look at the percentage of stocks trading at 10-day highs, which is a strong impulse indicator for the Nasdaq given its high beta composition (high-beta equates to larger expected moves). After corrective periods in the past, we have seen this particular indicator achieve higher levels than it currently holds and within an uptrend.

The previous corrective Nasdaq wave looks similar to that of today (large red circles). When the Nasdaq rallied within and coming out of the corrective period from September to October 2020, this breadth indicator surged above 55 percent. If indeed there is more upside to come and the worst of the corrective wave is in the rear-view mirror for the Nasdaq, we would expect this indicator to rise at least another 6 percentage points in the next week or two.

Research Report Excerpt #4

Least we also forget about another Nasdaq signal that fired near the very end of February…

The Nasdaq Daily Sentiment Index fell below 60 for the first time in more than 3 months toward the end of February. Historically, long streaks of elevated sentiment always led to more gains for the Nasdaq over the next 3 months.

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