NASDAQ Composite (.IXIC) recouped the losses incurred in the final months of 2018

NASDAQ Composite (.IXIC) recouped the losses incurred in the final months of 2018

NASDAQ Composite (.IXIC) recouped the losses incurred in the final months of 2018

Wall Street posted its strongest quarterly rise in a decade, with the broader S&P 500 index rising 13.1%, marking its best start to a year since 1998. The index also successfully notched its biggest one-quarter gain since the end of the Great Recession.

But, it’s just not the S&P 500 that started off well this year. Other major bourses, including the Dow Jones Industrial Average, Nasdaq Composite and the Russell 2000 index of small-cap stocks, surged more than 11%. The indexes recouped the losses incurred in the final months of 2018, when fears of a global recession sent markets across the globe sliding.

The first-quarter gains were predominantly led by a sharp rebound from the Christmas Eve lows, Fed’s patient stance with interest rates hikes as global growth slows and increasing optimism in U.S.-China trade negotiations.

The Fed’s latest comment that the rate increases are on a pause is of utmost significance. This dovish stance certainly helped the broader market chug along in the first quarter. The Fed confirmed that it would be “patient” with future rate hikes and has also indicated that the unwinding of the asset portfolio might conclude sooner than expected.

Such views were widely considered as accommodative measures, at least for the time being, and have had a soothing effect on investors. After all, the Fed’s rate increase last year has taken a toll. This is because hike in rates increases the cost of lending money from financial institutions for small and medium business houses. This in turn could exert more pressure on the U.S. economy that is on the cusp of a slowdown this year.

On the political side, both U.S. and Chinese trade officials have begun talks to bring an end to their prolonged trade dispute. These economies imposed billions of dollars of tariffs on each others’ goods over the past year, battering equity markets, souring business and consumer sentiment as well as hampering economic growth.

Also, stocks bounced back in the first quarter as rise in oil prices eased worries about global economic growth, fourth-quarter earnings coming in better-than-expected and China, itself, taking enough steps to stimulate its economy.

The U.S. oil price benchmark, West Texas Intermediate, climbed 32% during the first quarter to nearly $60 a barrel. The Trump administration’s unexpected move to grant waivers to most of Iran’s buyer resulted in more oil than needed, leading to a plunge in oil prices. But, OPEC’s policy shift to quickly reduce supplies rebalanced the oil market and helped oil prices increase.

Coming to the fourth-quarter earnings report, total earnings growth for the S&P 500 index came in at 13.4%, showing a quarterly growth pace that was roughly double the pace in the first three quarters of the year (Read more: Q1 Earnings Season Gets Underway ).

Beijing, in the meantime, introduced a series of measures including cutting taxes to help support its economy. And such measures paid off! The Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) rose to an eight-month high of 50.8 in March, beating most of analysts’ projections.

Overall, the bias in prices is: Upwards.

Note: this chart shows extraordinary price action to the upside.

The projected upper bound is: 8,044.28.

The projected lower bound is: 7,643.32.

The projected closing price is: 7,843.80.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 30 white candles and 20 black candles for a net of 10 white candles.

A rising window occurred (where the top of the previous shadow is below the bottom of the current shadow). This usually implies a continuation of a bullish trend. There have been 9 rising windows in the last 50 candles–this makes the current rising window even more bullish.

Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 75.2536. This is not an overbought or oversold reading. The last signal was a sell 8 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 65.52. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 6 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 175.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 6 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 5 period(s) ago.

Rex Takasugi – TD Profile

NASDAQ COMPOSITE closed up 99.589 at 7,828.910. Volume was 12% below average (neutral) and Bollinger Bands were 34% narrower than normal.

Open High Low Close Volume___
7,800.2367,831.4537,777.0957,828.910 533,382,752

Technical Outlook
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish

Moving Averages: 10-period 50-period 200-period
Close: 7,713.44 7,464.75 7,490.80
Volatility: 20 17 25
Volume: 572,996,224 593,067,392 582,982,848

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

NASDAQ COMPOSITE gapped up today (bullish) on normal volume. Possibility of a Runaway Gap which usually signifies a continuation of the trend. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
NASDAQ COMPOSITE is currently 4.5% above its 200-period moving average and is in an upward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect volume flowing into and out of .IXIC at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on .IXIC and have had this outlook for the last 56 periods.

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