Timing, Probability or Both

The Nasdaq 100 closed at 16,562.

It is 1% away from a) trading at 2.5 standard deviations above its rolling weekly mean and b) registering a weekly overbought reading.

Incidentally, it has moved from 2.5 standard deviations (SD) below its weekly mean to 2.5 SD’s above, within 8 weeks.

It is also trading at 27% above its 200 week moving average.

(readers of my posts will recognise that pattern).

It is in the midst of a 7 week winning streak.

Also, the Nasdaq 100 is yet to make a new ‘higher high’. That high of 16,765 was seen in November 2021.

Lastly, there are ‘gaps’ below. I’m watching the one at 14,421.

A 12% decline from today’s price would only represent a 38% retracement of this particular advance which commenced in December 2022.

What would be wrong with a 12% for an index which has risen 56% over the past 12 months?

Subjectively, the ‘Magnificent 7’ make up more than 50% of the Nasdaq 100’s market cap and they account for 30% of the S&P 500 market capitalisation.

Many others are welcome to initiate a ‘long position’ at today’s prices on the basis that a ‘break-out’ will provide them with what they are looking for.

December 14, 2023

by Rob Zdravevski

rob@karriasset.com.au