If you looked at what words are most frequently used in market reports associated with big moves you can see it rotate. Last year you had pandemic, COVID, shutdown popping up any time the market moved farther down. Then we started to see recovery, vaccines, and lockdown start to be more prevelant. Last fall it shifted to election and jobless numbers.
From the beginning of this year we started to see reopening continue but we have also seen inflation move into the mix. And we are smack in the middle of the markets trying to figure out how they want to react when they hear an update on inflation. This isn’t helped by the confusing messages from the Fed that stir the pot even more.
What is interesting is that we have see the big indexes become less correlated then they have been for a long time. Take a look at these charts:
The Dow has, over the last three months, found a solid support from the 50 day and been able to recover after a correction and get closer to the 10 day. The NASDAQ, however, has been much less graceful.
Tech has been much wilder and has fell through the 50 more often and feels way more fragile.
The key is that the current focus on inflation is having a much more dramatic impact on the NASDAQ. This is where momentum tools can really help key in on these swings and confirm the patterns.
Lee Gettess helps his readers identify the momentum patterns and turn these wild swings into winning trades.
Momentum Trading with Precision shows some of the most powerful examples of these indicators. Grab it here and make sure you are able to confirm the trend.
John Boyer is the founder and editor of Market Wealth Daily. Together with TradeWins Publishing, John shares daily market news and trade ideas from himself and some of the most talented options traders in the game.