ATTEMPTING TO IDENTIFY A NASDAQ NEAR TERM BOTTOM
First thing I did as I was analyzing the Nasdaq data, was compile an ongoing
> list of each new closing lows in the Nasdaq. I compared the market
> internals each time the Nasdaq closed at a new low. Here is the list:
>
> Nasdaq Closing Lows since January 2000
> April 14th - new low of year 2000 closing at 3321
> May 23rd - breached April 14th low closing at 3164 (Positive Divergences
> Spur Rally)
> Oct. 12th - breached May 24th low closing at 3074
> Nov. 10th - breached Oct. 12th low closing at 3028
> Nov. 13th - breached Nov. 10th low closing at 2966
> Nov. 20th - breached Nov. 13th low closing at 2875
> Nov. 21th - breached Nov. 20th low closing at 2871
> Nov. 22nd - breached Nov. 21st low closing at 2755
> Nov. 28th - breached Nov. 22nd low closing at 2734
> Nov. 29th - breached Nov. 28th low closing at 2706
> Nov. 30th - breached Nov. 29th low closing at 2597
> Dec. 19th - breached Nov. 30th low closing at 2511
> Dec. 20th - breached Dec. 19th low closing at 2332
> Calendar Year 2001
> Jan. 2nd - breached Dec. 20th low closing at 2291 (Positive Divergences
> Spur Rally)
> Feb. 21st - breached Jan. 2nd low closing at 2268
> Feb. 22nd - breached Feb. 21st low closing at 2244
> Feb. 27th - breached Feb 22nd low closing at 2207
> Feb. 28th- breached Feb 27th low closing at 2151
> March 2nd - breached Feb. 28th low closing at 2117
> March 9th - breahed March 2nd low closing at 2052
> March 12th - breahed March 9nd low closing at 1923
> March 16th - breached March 12th low closing at 1890
> March 20th - breached March 12th low closing at 1857
> March 21st - breached March 20th low closing at 1830
> March 29th - breached March 21st low closing at 1820.
> April 2nd - breached March 29th low closing at 1782
> April 3rd - breached April 2nd low closing at 1673
> April 4th - breached April 3rd low closing at 1638 (Positive Divergences
> Across the Board - Will it spur a rally?)
>
> Ok, I am now going to go through all of the market internals which
> demonstrate positive divergences between the Nasdaq close today (April 4th)
> versus the prior Nasdaq closing low which occurred on April 3rd. Let's
> crunch the numbers:
>
> 1. Price
>
> On April 3, 2001, the Nasdaq (or OTC - Over the Counter) closes at a new low
> for the year of 1673. Today, April 4, 2001, the Nasdaq closed at 1638. A
> new closing low in the Nasdaq gets us past the first hurdle.
>
> 2. Volume
>
> On April 3, 2001, there were approximately 2.511 million shares traded on
> the Nasdaq . Today, the volume on the Nasdaq was approximately 2.416
> million shares. Therefore, we have a new closing low in the Nasdaq on lower
> volume. The second hurdle is complete. A lower close with lower volume is a
> positive indicator since it indicates there wasn't as much selling volume
> even though the composite closed lower.
>
> 3. Advancing Issues
>
> On April 3, 2001, there were 800 Advancing Issues. For those of you new to
> technical analysis, "advancing issues" are simply stocks that rose in price
> on that day. Today, there were 1,493 Advancing Issues. That is a huge
> increase in percentage of advancing issues when the Nasdaq closed lower than
> the prior day. Bullish Indicator!
>
> 4. Declining Issues
>
> On April 3, 2001, there were 3,013 Declining Issues. Today, there were only
> 2,239 Declining Issues. Less decliners is also a Bullish Indicator!
>
> 5. New Highs
>
> On April 3, 2001, there were 17 new highs. Today, there were 21 new highs.
> More new highs is better. Bullish Indicator!
>
> 6. New Lows
>
> On April 3, 2001, there were 569 new lows. Today, there were only 485 new
> lows. Less lows is good. And that is a significant decrease in the number
> of new lows. Bullish Indicator!
>
> 7. Advancing Volume
>
> On April 3, 2001, the advancing volume in the Nasdaq was 165,345. Today,
> the advancing volume was 686,516.
> Woah Nellie! That's a HUGE increase in advancing volume. This evidences a
> lot more buying volume than selling volume even on a day when the Nasdaq
> closed lower than the previous close. Bullish Indicator!
>
> 9. Declining Volume
>
> On April 3, 2001, there were 2,316,055 declining shares. I was hoping there
> would be more less declining shares indicating less selling pressure today,
> and there was! Today, there were 1,682,176 declining shares. Bullish
> Indicator!
>
> Conclusion. Ok, now the analysis. Beware of market internals. They looked
> good the last time I analyzed them, but categories #7 and #8 were bearish
> last time. This is the only time I have seen positive divergences
> across-the-board with the exception of January 2nd and May 23rd - both of
> which sparked rallies in the Nasdaq.
>
> Point #1: Does the fact that positive divergences exist across the board
> this time mean that the Nasdaq hit a near term low on a closing basis today
> and a near term rally is set to begin? Certainly not. Tomorrow's market
> action could be dictated by exogenous events such as war, alien invasions,
> companies declaring bankruptcy, political instability, yada yada yada, I
> want a new Miata.
>
> Point #2: Like I said, this is simply my Interpretation of the data, so you
> can make of it what you will. This is interesting stuff and if this does
> signal an interim bottom, I will retain my faith in market internal
> analysis. If it doesn't. Well, then its back to the drawing board. I plan
> on speculating a little tomorrow in the Nasdaq in the hopes that I can catch
> a rally from this point going forward. I will let you know if it is
> successful or not. Actually, you will know by watching the Nasdaq whether
> it is working, so you can live vicariously through me if you'd like!
>
> Point #3: Please do not take any of this as a recommendation of any sorts.
> In fact, I encourage you to ignore everything I say and do your own
> research. I am just sharing with you my analysis and thought process |
