Market Analysis (13 April’21)

The Dow Jones Industrial Average wobbled Tuesday as investors tried to gauge the impact of a halt in the rollout of Johnson & Johnson’s Covid-19 vaccines and an uptick in inflation. At the same time, the tech heavy Nasdaq closed at the new all time highs.

Nasdaq At All Time Highs

Nasdaq index closed today’s session at the new all time highs (at 13986) and is now very close to reaching another important technical milestone — a 14000 mark.

Today’s break out into the new ATHs is not surprising since the Nasdaq’s Advance-Decline line broke to its own new ATHs 5 sessions ago. The ADLine trajectory is often considered a good precursor to the underlying index price action.

ADLINENDX, daily

The Nasdaq’s fear (or volatility) index VXN also confirms the ongoing Nasdaq’s strength by dropping below 26%, which acted as support for VXN since June 2020.

VXN, daily

Given all these factors, the odds favor higher prices for Nasdaq despite the fact that some of the Nasdaq’s breadth indicators show weakness (e.g., BPCOMPQ is still pointing down despite today’s break out). Analyzing the Nasdaq’s futures price dynamics, one can conclude that if NQ can hold above 13900 in the near future, the bullish momentum should continue. The bear case can be in play only if NQ drops below 13840 – key short-term resistance of the last several sessions.

NQ, 1h

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