NASDAQ momentum is diverging

The NASDAQ has put in a new high on declining momentum. Oscillators like the short termed Stochastics indicator – and more importantly the 14-week RSI and the longer termed MACD indicator show us that enthusiasm is waning on the NAZ. Volume is lower over the summer, but that’s not unusual.

On the positive side are the trend, which is inarguably in an uptrend (higher highs and lows, above the important moving averages). Moneyflow (Accumulation/Distribution, bottom pane) is trending up – although that indicator is off a bit of late—no doubt due to the summers lower volume. The top pane is moneyflow momentum (Chalkin) – it’s a short termed picture of the state of enthusiasm by market participants. Its diverging negatively.

So it would appear that the major price trend tools are telling us the big picture is fine.  But the momentum oscillators and short termed moneyflow oscillator are showing some neartermed signs of weakness. Mind you, that’s been going on for the entire summer – as discussed on this blog.

The Nasdaq’s largest weightings are in Apple, Microsoft, The FANG’s (Facebook, Amazon, Netflix, Google) Intel, Cisco and Comcast.  I won’t print all of the charts for those stocks here (I’m feeling pretty unable to exert effort right now after a 3-day bicycle stage race over the weekend). But I will note that the biggest holding of Apple and Microsoft are supporting the new highs on the index.

Of the FANGS, Facebook is making new highs, Netflix is flat, and Amazon & Google are lower than their recent highs. All are trending nicely up from a longer termed perspective.

For the remaining “biggies”: Comcast is flat, while Intel and Cisco are off of their highs.  Their trends are wavering – neutral at best. No dominant uptrend to be seen here.

All in, NAZ is likely going to pause for a bit – given the mixed messages of its top components – and the divergences in the indicators noted above. I wouldn’t expect much of a precipitous drop, though. The trend is showing no signs of breaking. Any hesitation or pullback on the better components of the index – or the index itself, will probably represent a buying opportunity.

Supporting junior athletes

As an aside – hats off to a truly good man, Graham Fraser, who runs Centurion Cycling . Graham gives his time, commitment and funding to junior bike racers in Ontario. It’s great to see somebody giving to the kids and helping them pursue such a positive lifestyle – many of Centurion’s junior development team have gone on to join the pro ranks. ValueTrend, through my participation with the Centurion Masters club, helps to support Graham’s efforts.