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NASDAQ Correction or Start of Something Bigger?

February 20, 2024

Mish's Daily

By Mish Schneider

While the financial world waits for NVDA earnings and watches a correction in many of the MAG 7 and other related tech stocks, a lot of noise erupts.

The biggest noise is whether this is the top.

Those of you who are familiar with our work at MarketGauge.com know that we use risk gauges to help us differentiate between a correction and major sell-off.

Looking at the NASDAQ chart through QQQ, the price broke below the fast-moving average.

However, it remains well above the 50-DMA and the January 6-month calendar range high.

Real motion or the momentum indicator shows a decline with momentum with a bearish divergence to price.

NASDAQ now underperforms SPY.

This leaves a mixed technical picture.

Looking just at the price we must go with correction.

NVDA could easily reverse this path with a beat and a huge spike higher.

Or not.

However, we do have some pause here, considering the weaker momentum and lack of leadership.

Of course, this could be a rotation. However, none of the major indices or sectors performed well EXCEPT…

Junk bonds or high yield, high debt bonds closed green.

In the chart, the price shows it scraping against the 50-DMA.

To get more bullish or see more of a risk on environment, the price should clear back over the 50-DMA.

Momentum is flat to price, both just under the 50-DMA.

The important part of this chart is Leadership.

With HYG outperforming TLT or the long bonds, we can safely say the market remains risk on.

Should that change, then we expect a much deeper correction.

However, should HYG hold up and better still, clear over the 50-DMA, then most likely, ahead of NVDA, the market is giving traders an opportunity to buy the best stocks a bit cheaper.

I will be at the Money Show for the rest of the week.

There will not be a Daily published until the show is over.

Have a great week!

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Mish in the Media - All clips here

Business First AM I really lay out the 3 major criterial and teach you tactical/practical ways to assess a top (all in 3 minutes). $HYG $IWM #Januarycalendarrange When Is It Time To Take Profits? 02-20-24

Final Bar with Dave Keller StockChartsTV Guest Mish breaks down the four charts she's watching during a market pullback and why she remains constructive on stocks 02-14-24

Business First AM Check out Mish’s newest stock pick to keep on your radar 02-13-24

BNN Bloomberg Valentines Day-What stocks do you love, want to marry, regret not holding 02-12-24

Financial Sense with Jim Pupluva Credit card balances for US consumers are climbing. Is this yet a concern for the market and economic outlook? 02-07-24

The Money Life with Chuck Jaffee Where Mish sees the markets going in the short and longer term 2024 podcast 02-06-24

Benzinga Morning Pre Market Mish sits with the team to discuss the recent job report and how a healthy economy is not the worst thing. It just means a reset of how investors invest 02-02-24

CNA Asia First Mish’s debut talking the Fed, inflation, big tech earnings and what investors should look out for 01-31-24

Money FM 89.3 Singapore Mish on breakfast bites talking earnings and interest rates-plus her made up ETF 01-31-24

Kitco News An Article with Neils Christensen on the direction for gold 01-30-24

Coming Up:

February 21-23 The Money Show in Las Vegas

February 26 CNA Asia First TV and Radio

February 29 Yahoo Finance

February 29 Your Daily Five Stockcharts

March 6 Trader’s Summit

March 8 Schwab

Weekly: Business First AM, CMC Markets

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