Stocks rebounded hard last week after Wall Street pledged billions of dollars to help ease the strain on regional banks. The corresponding reversal pulled the NASDAQ’s 50-day moving average above the 200-day average, something we’ve been talking about for the last two weeks. The bounce also generated another technical buy signal, a bullish MACD crossover.
It’s clear investors believe Silicon Valley Bank and Signature Bank’s news changed the dynamic for the Federal Reserve; although, the European Central Bank (ECB) hiked interest rates in the aftermath of the bad banking news. The ECB noted that inflation is still their primary objective and would continue to take actions to tame high prices.
Market watchers feel that with Wall Street showing a willingness to help their own, it frees the Federal Reserve to pause, slow, or stop rate increases to give other stressed banks time to breathe and room to get their financials in order.
While the rebound helped complete a pair of bullish crossovers for the NASDAQ, the index gave a little back on Friday at the very top edge of the current trading channel. So, we are 90% there, on the verge of a triple technical breakout. If the NASDAQ can close above Thursday’s intraday high of 11,733, the index would likely go higher, maybe as high as 12,300.
Meanwhile, downside would likely be initially limited to the neighborhood the 50-day and 200-day averages occupy on the same block around 11,400. A close below both trendlines would be worrisome and likely thwart upside momentum for the time being.
Investors with a little bit of patience might wait to see the NASDAQ close above 11,733 and then consider an index exchange-traded fund like Invesco QQQ Trust (QQQ), which tracks the daily performance of the NASDAQ 100.
Technology ETFs stormed to the forefront of the performance leaderboard, as you would expect in a strong week for the overall markets. Internet funds were the strongest with ARK Next Generation Internet ETF (ARKW) and First Trust Dow Jones Internet Index Fund (FDN) leading the way with the top two spots. Overall, nine of the 10 best performers were tech related.
ARKW could have some additional upside as its chart resembles the NASDAQ but lags by a little. Its 50-day average is another good day or two from completing a Golden Cross too. And, much like the NASDAQ, ARK Next Generation Internet ETF is flirting with the upper level of its trading range as well. A close above $52 could attract buyers and push the 50-day above the 200-day benchmark. Like the NASDAQ, ARK also has a recent bullish MACD crossover.
Shopify Inc. (SHOP) is ARK’s sixth largest holding at close to $78.5 million and 6.3% of its portfolio.
Shopify is the leading global commerce company that provides essential internet infrastructure for commerce, offering trusted tools to start, scale, market, and run a retail business of any size. Shopify powers millions of businesses in more than 175 countries and is trusted by brands such as Mattel, Gymshark, Heinz, FTD, Netflix, Kylie Cosmetics, SKIMS, Supreme, and many more.
SHOP has been hugging its rising 50-day moving average and is building upward momentum. If the software-application company can close above $45, it last traded at $44.68 as of this keystroke, then the next level higher should be close to $47.50 and possibly into the low-to-mid $50s if the NASDAQ rallies.
Remember, short-term trading is only appropriate for the most aggressive investors who can afford to lose money.