LIVE MARKETS-Nasdaq composite and the search for a tradable low

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NASDAQ COMPOSITE AND THE SEARCH FOR A TRADABLE LOW

The Nasdaq composite .IXIC ended Monday down 13.4% from its December 16 record closing high. That said, recent action has been especially sharp to the downside.

The composite has now fallen about 13% over just the last 13 trading days. That's its most severe rolling 13-day slide since a 13.6% collapse that ended in May 2022.

And Monday was especially rough as the IXIC swooned 4% for its biggest one-day percentage drop since September 2022.

With this, bulls are looking to measures of the composite's internal strength for signs of a washout that may offer potential for at least a tradable low. Indeed, one such measure, the Nasdaq New High/New Low (NH/NL) index, has now collapsed to its lowest level in nearly a year:

The NH/NL index ended Monday at 18.1%, putting it just above its April 2024 trough, which was at 17.7%.

Of note, in terms of relatively recent history, this measure put in a low of 18% around the time the Nasdaq was ending its 2021-2022 bear market on a closing basis in December 2022. It bottomed at 13.9% in the wake of the market's early 2023 Silicon Valley Bank panic.

The NH/NL index has a tendency to turn violently with a V-bottom. Even with this, however, it could, of course, struggle to sustain an upward reversal. Nevertheless, the current sub-20% reading appears interesting.

Still, in late September 2022, just ahead of the S&P 500's .SPX October 2022 bear market closing low, this measure bottomed at 4.5%, and just a few trading days after the market's late October 2023 lows, it ended at 4.8%.

(Terence Gabriel)

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