Four Stock Market Index Checkup on May 31 Pullback
Wed, May 31, 3:11 PM ET, by Corey Rosenbloom
If you’re only looking at one of the four main US Equity Indexes, you might be missing something right now.
On the pullback from the all-time highs in the stock market, which index is the weakest right now?
Let’s dust off our Quad-Index Grid and take a look:
The top left shows the popular @ES or S&P 500 index (all are futures contracts) alongside the @YM Dow Mini.
These look the most similar in terms of price highs/lows and structure.
Both took a dive in mid-May and then violently recovered with a non-stop rally to new all-time highs.
Beneath these two similar indexes are the somewhat dissimilar @NQ NASDAQ and @TF Russell 2000 index.
The NASDAQ has been the strongest index lately with the heavy emphasis on strong technology names.
However, the Russell 2000 is the laggard of the group, having failed to make a new high as it continues an intraday downtrend (while all three other indexes charged to new highs).
The pullback has ben more severe and taken price back toward the May “collapse” lows near 1,355 in the @TF.
The main point: While the S&P 500 and Dow Jones paint a similar picture on the pullback, the NASDAQ is stronger (relative strength) while the Russell is a clear laggard (relative weakness).
If you believe the market is about to rally, focus on the NASDAQ long. If you think it’s about to fall, consider trading the Russell short.
Follow along with members of the Afraid to Trade Premium Membership for real-time updates and additional trade planning.
Corey Rosenbloom, CMT
Afraid to Trade.com
Follow Corey on Twitter: http://twitter.com/afraidtotrade
Corey's book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).”
SDI Glossary: "price" Definition
SDI Glossary: "Equity" Definition
SDI Glossary: "Finance" Definition
SDI Glossary: "NASDAQ" Definition
SDI Glossary: "Stock" Definition
SDI Glossary: "Trend" Definition
This Article's Word Cloud:
More articles: 1 2 3 4 5 6 7 next »