The NASDAQ 100 ($NDX) has been surging greater since October 2023 with the tempo of advance accelerating within the second quarter of 2024. These 100 parts are among the many largest market capitalization NASDAQ Composite ($COMPQ) shares. The entire ‘Magnificent-7′ mega-caps are represented on this index. Now the second quarter is concluding and the $NDX has been leaping upward in what Wyckoffians would describe as a climactic tempo. Finish-of-Quarter window dressing is suspected. Institutional sorts are deploying accessible money into hot-hot Magazine-7 shares previous to Quarter-Finish. NVDA alone has added about 1 trillion {dollars} of market cap to its valuation in a few month …. Beautiful. Solely establishments, en masse, have the shopping for energy to propel valuations greater in such a quick time frame. And this stampede of shopping for has been rushed into the top of a three-quarter uptrend. Such Shopping for Climaxes are sometimes reversed all of the sudden and sharply in what Wyckoff phrases an Computerized Response (AR). We are going to look ahead to the potential for such a reversal within the third quarter. If establishments are accelerating their shopping for into the present calendar quarter, then demand ought to dry up because the month and quarter rolls over.
The chart examine beneath illustrates early indicators of exhaustion among the many elite development shares of the NASDAQ 100. The examine is of the $NDX advance / decline line as a illustration of the breadth of participation of those 100 shares. Observe that with the late March value excessive within the index (first quarter window dressing) the A/D line peaked. It has not exceeded this stage within the three months since. With the torrid rise of the $NDX within the second quarter, a transparent and dramatic divergence has developed. Breadth divergences usually warn of an impending ‘Change of Conduct’ within the inventory market indexes.
NASDAQ 100 Index with Advance / Decline Line 2020-2024
Chart Notes:
- Throughout 2021 the $NDX and the A/D line climbed lockstep to the Bull Market peak in November.
- In March 2024 the NASDAQ 100 A/D Line peaked and, up to now, has not matched that peak within the second quarter. The $NDX has soared to new heights since then, making a dramatic divergence.
- In the course of the second quarter NVDA climbed above the 3-Trillion greenback mark turning into the biggest market capitalization firm exceeding each AAPL and MSFT. In the course of the 12 months NVDA has added almost $2T to its market capitalization (via June nineteenth). A lot of the energy of the $NDX within the quarter is attributable solely to NVDA.
- The NASDAQ 100 index consists of the premier development shares of this bull market. The A/D Line of the index signifies the vast majority of these elite development names have paused of their respective uptrends. This A/D Line divergence confirms the narrowing of cash flows into fewer elite development shares.
NASDAQ 100 Index Level & Determine Case Research
Whereas the NASDAQ 100 A/D Line was making an inner momentum peak on the finish of the primary quarter the Level & Determine value targets estimated by the 2022-23 Accumulation nonetheless had greater to go. On this PnF chart March concluded with an entry at 18,000. The estimated value goal of the Accumulation on this examine is nineteen,600 / 20,800. NVDA and different shares within the $NDX accommodated and continued climbing within the second quarter to the PnF value targets, reaching 19,800 in late June.
Chart Notes:
- A sudden and sharp response would recommend the beginning of a range-bound situation. This has not occurred but. The uptrend might have additional to climb. A interval of Trigger Constructing can be anticipated to comply with. Solely then may it’s decided if Re-Accumulation or Distribution is underway.
- Observe the diminishing quantity with every upward thrust of the development. Demand is waning. One other warning that fewer shares are propelling the index to new heights.
- Research how the Re-Distribution depend of early 2022 flagged the Promoting Climax low and the trigger constructing strategy of Accumulation that resulted.
The PnF examine above pointed to greater value targets because the momentum peaked in March and some Mega-Cap shares accommodated through the subsequent quarter. Now the $NDX is within the strategy of fulfilling these greater value targets. Wyckoffians have a guidelines of what to observe for when figuring out the intentions of the big Composite Operators because the final half of the 12 months approaches.
All of the Finest,
Bruce
@rdwyckoff
Disclaimer: This weblog is for instructional functions solely and shouldn’t be construed as monetary recommendation. The concepts and techniques ought to by no means be used with out first assessing your personal private and monetary state of affairs, or with out consulting a monetary skilled.
Useful WPC Weblog Hyperlinks:
Trifecta of Hassle (Click on Right here)
Distribution Definitions (Click on Right here)
Wyckoff Energy Charting. Let’s Assessment (Click on Right here)
Wyckoff Assets:
Further Wyckoff Assets (Click on Right here)
Wyckoff Market Dialogue (Click on Right here)
Bruce Fraser, an industry-leading “Wyckoffian,” started instructing graduate-level programs at Golden Gate College (GGU) in 1987. Working carefully with the late Dr. Henry (“Hank”) Pruden, he developed curriculum for and taught many programs in GGU’s Technical Market Evaluation Graduate Certificates Program, together with Technical Evaluation of Securities, Technique and Implementation, Enterprise Cycle Evaluation and the Wyckoff Technique. For almost three many years, he co-taught Wyckoff Technique programs with Dr.
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