LIVE MARKETS-Nasdaq Composite: Creatures are stirring, including the mice

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NASDAQ COMPOSITE: CREATURES ARE STIRRING, INCLUDING THE MICE

As 2023 is about to draw to a close, the Nasdaq Composite .IXIC is showing an impressive 44.2% year-to-date gain, which has it on pace for its biggest yearly rise since a 50% advance in 2003.

Recently, the Composite has been streaking higher. The IXIC is on track to rise for a ninth-straight week. The Nasdaq posted a 10-week run of gains from late-December 2018 to early-March 2019.

Indeed, the year's gains have been skewed by strong gains in the Magnificent Seven, however, of late, under the surface, the market has been broadening.

Amid the current rally, one measure of the Nasdaq's internal strength, the Nasdaq New High/New Low (NH/NL) index, has now broken out above a near-three year resistance line:



After bottoming at 4.8% on November 1, the measure has now surged to 76.0%. In so doing, it has been above its 10-day moving average (DMA) for 38-straight trading days which is its longest such stretch since a 38-trading day streak from late-November 2020 to late-January 2020.

The NH/NL index ascended above its 10-DMA for 48-straight trading days from late-March 2003 to late-May 2003.

With its current thrust, the measure is rapidly nearing its February 3, 2023 high at 79.2%. The measure's early-2021 peak was at 96.4%, and even then, the Nasdaq did not see a major top until a protracted divergence developed into its November-2021 peak.

The broken resistance line, which resides around 71%, should now act as support. The rising 10-DMA ended Thursday at 67.1%.

Coming back below these levels can suggest the NH/NL index's current advance may be exhausted, and suggest risk that the Composite sees a downside turn.

Meanwhile, the Nasdaq's daily advance/decline (A/D) line is challenging resistance at its 200-DMA, while the NYSE's A/D line is just shy of its record high.


(Terence Gabriel)

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(Terence Gabriel is a Reuters market analyst. The views expressed are his own)

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