Nasdaq Recovers its 50-Day Moving Average

Monday’s session offered a bit of hope for bulls as we saw stocks move higher. Volume was not overly convincing, but we did see the Nasdaq recover its 50-day moving average. A positive sign for a new uptrend. Volume was mixed on the exchanges yesterday. NYSE saw volume rise while Nasdaq ended lower on the session. Despite leading in price gains the Nasdaq simply did not get enough support from institutions to push the volume higher on the session. Small caps enjoyed nice gains, but the index is still far behind the rest of the major indexes. We will continue to stick with strength rather than hope and pray the laggard will become the leader. Price always is the leading indicator and it takes more than one day of trading to set a trend. This market isn’t out of the woods just yet. However, Monday was a positive for the bulls.

The S&P 500 did not quite get itself above its own 50-day moving average. Volume was higher on the index and given the 1.61% gain certainly counts as a follow-through day. The distribution must be avoided the rest of the week and given there is a debate tonight anything is possible. While anything is always possible markets can be volatile post debates. Whether it leads to anything remains to be seen. Proper risk management strategies must be used to avoid serious trouble. We are constantly adjusting our open risk to match what is happening in the market. There is no need to be a hero as we are still in a seasonally weak period and presidential election year. Staying cool, calm, and collected is the best course of action when everyone else is in panic mode. Controlling our emotions as traders is helpful in staying disciplined with our approach.

AAPL, AMZN, and NFLX are interesting to watch here. AAPL holding its 50-day is a great sign for those who are long the stock. GOOGL is another where the 200-day has acted somewhat as support. AMGN another Nasdaq giant remains flat and above its 50-day moving average. ZM is still in the stratosphere and for holders, you must be obeying your exit strategy. Hoping this thing will continue to go higher without a backstop is a plan for disaster. CRM is holding just under its earnings day low. It would not surprise us one bit to see this stock continue to tighten up in light volume. Big names are acting well, and this bodes well for the Nasdaq. Time is always the scorekeeper and we must remain vigilant in our approach.