LIVE MARKETS-Nasdaq composite internal measure nears important juncture

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NASDAQ COMPOSITE INTERNAL MEASURE NEARS IMPORTANT JUNCTURE

The Nasdaq composite .IXIC managed to end a four-day losing streak on Wednesday. And now, in the wake of Nvidia's NVDA.O highly anticipated quarterly report, the composite appears poised for further strength at the open given that e-mini Nasdaq 100 futures NQcv1 are popping more than 100 points, or around 0.6%, in premarket trade.

That said, a check of one measure of the composite's internal strength shows that it remains challenged:

On December 6, the Nasdaq New High/New Low (NH/NL) index rose to 73.5%. However, it then, once again, stalled at the resistance line from its early 2023 high, before then diverging into the composite's December-16 record highs.

After falling to as low as 34.9% on December 26, the measure has been flailing around in a range. It rose to 55.1% on January 31, but ended Wednesday at 43.4%. Meanwhile, the IXIC has sold off as much as 5.7% from its record closing high.

The NH/NL index is now just above its mid-January troughs, which were at 41.1%, and the support line from its November 2023 low, which is now at 39.4%.

Thus, if this support line is to continue to hold, the NH/NL index would appear close to renewed strength. If it were to exceed 55.1%, it would potentially refocus it on the resistance line from its early 2023 high, which is now just over 72%.

A breakout above this barrier would suggest potential for much broader Nasdaq strength (the measure peaked at 96.4% in early 2021 followed by a protracted period of dissipating energy into the composite's November 2021 peak).

Conversely, a breakdown below the support line can coincide with greater Nasdaq instability, potentially leading to a washout low.

Additional 2024 troughs were at 27.1% and 17.7%.

The NH/NL index was at a sub-10% level when the Nasdaq ended its July-October 2023 10%+ correction.

(Terence Gabriel)

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