On January 29th, I showed a chart of a short-term indicator I keep that sums TICK readings on the Nasdaq. At the time, I mentioned that the indicator was at a point that suggested the NDX should stage a 30-50 point rally if the larger uptrend was still intact. The index did indeed comply, as it soon rallied just over 30 points over the next couple of days. After the TICK indicator become very slightly overbought, the NDX then suffered another decline, and once again our cumulative TICK became extremely oversold on February 4th. That time we saw a 50 point rally in the NDX over the next week (though it paused after the TICK became overbought). Currently, the indicator is again oversold, though it is only what I would consider mildly so (a "close-up" chart is below, with the blue line representing the TICK indicator).
While the recent market action "feels" different to me compared to what we saw over the past 9 months or so, from the action of the TICK indicator the market is doing pretty much what it is supposed to do. When the market cannot rally from oversold readings, and/or short-term rallies fail before the TICK can reach overbought, then that's when I will become more concerned about substantial longer-term declines.
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