behavior of leading stocks in a market correction

Screen Shot 2018-03-29 at 9.49.25 AM

FFTY is the fund that has the 50 leading stocks in the market. Since Feb 17th 2016 techs have been dominant leading index. the purple line is the 50 day simple Moving average (SMA) and the red line is 200 day SMA. If the leading stocks are testing their 200 SMA. Time to get to the sidelines and watch (as indicated in previous post) The volatility has been crazy!

on Monday The Nasdaq composite up 3.3%; the Dow Jones industrial average soared 2.8% and the S&P 500 jumped 2.7%. a pure dead cat bounce!! because on Tuesday The Nasdaq composite plunged 2.9% and undercut Friday’s low. The S&P 500 slid 1.7% !!

Both indexes’ price ranges Tuesday exceeded the prior day’s — a bearish behavior that’s known as an outside day!

semiconductor, software, internet have taken much more pounding as the stock market sees its second intermediate-level correction unfold so far this year.

The Nasdaq 100 slid 1.1% and pierced the 6500 level for the first time since Feb. 8.

The biggest winners fall 1-1/2 to 2-1/2 times as much as the major indexes do. What does this mean? With the Nasdaq at 6949, down 9% from its 7637 all-time peak, expect some of the leaders to fall anywhere from 14% to 23% from their own 52-week or all-time peaks.

look at the S&P index – a very robust broad and key index

Screen Shot 2018-03-29 at 10.03.53 AM

It is in hair’s breath of the most important indicator 200 day moving average. Why is this most important indicator ? mutual funds, hedge funds, pensions, sovereign wealth funds see this level at 200 day MA as the key level to buy or sell.

there is no buying now – look at the triple top in the second chart above. Stay in sidelines and watch

Source of some of this article : IBD

 

 

 

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