Most are more interested in grilling, sandy beaches, and celebrating Independence Day than the stock market. We understand, we are on the grill, headed to the beach, and plan on celebrating the 4th of July too. So, we’ll keep this week’s newsletter short and to the point.
The NASDAQ is testing its recent highs. While some expect the market to mirror soaring temperatures and melt up, we aren’t in the habit of jumping the gun. Unlike chickens, we don’t cross the road for the sake of crossing. We’ll wait for the light to turn green before crossing the street.
If the NASDAQ can move north of 13,900, it would trigger a bullish technical buy signal. However, the push higher would likely put the index into overbought territory, pushing the Relative Strength Index (RSI) above a reading of 70. It will be a tug of war between bulls and bears at that point; one that bears will eventually win.
Patience might prove to be a profitable virtue if the NASDAQ takes a little off the top. Support might emerge around 13,600. That’s approximately where stocks gapped higher from June 29th’s close to the open on the 30th. The NASDAQ could rally after “closing the gap” between 13,591 and 13,720.
Long-term, the NASDAQ is in a bullish posture and likely headed higher but could be subject to profit taking soon. For now, buying the dip is our technical opinion.
Invesco QQQ Trust (QQQ) outperformed SPDR S&P 500 ETF Trust (SPY) for the second week in a row. It’s usually a bullish signal when QQQ leads the way, which makes us believe there could be a little more upside and a move into overbought territory before profit taking.
As expected, Technology dominated the top of our leaderboard, which is normal when the NASDAQ is pulling the cart. Index investors might consider most tech-related exchange funds because their charts essentially mirror the NASDAQ.
Since it’s our view stocks could move into overbought territory, investors might be wise to add to their leading technology companies’ holdings rather than adding something new.
Back to the beach, BBQs, and fireworks.