Some might find this interesting. (We are currently in a power trend on the Naz, but if the 21dma crosses below the 50dma, then it is over. Here is the description…
Stock Market Condition Called Power Trend Is When You Really Need To Be Buying | Investor’s Business Daily (investors.com)
• Never fight the stock market — it's bigger than you are.
• A confirmed uptrend is when your real money is made, and this is when you can find a power trend. If you are fortunate enough to be trading during a power trend, this is when you will likely be fully invested because stock market conditions are so favorable.
Start of a Power Trend
A power trend starts when these four events occur simultaneously on a major index:
1. The [index] low is above the 21-day exponential moving average (EMA) for at least 10 days.
2. The 21-day EMA is above the 50-day simple moving average for at least five days.
3. The 50-day line is in an uptrend.
4. The market closes up for the day.
The End of a Power Trend:
• A power trend will usually end with the 21-day line crossing back below the 50-day.
• However, there are two possible events that will end a power trend early:
○ a circuit breaker and
○ a follow-through day failure.
Most circuit breakers are triggered by a break of the 50-day line while the Nasdaq is more than 10% off the most recent high.
One way a follow-through day fails is when the Nasdaq closes below the follow-through day’s low.
Just because a power trend is your opportunity to trade most aggressively, don’t think that means your other rules go out the window.
Follow your normal trading rules. Trade stocks that are breaking out of well-formed bases. Use 7%- 8% stop losses. Be open to pyramiding, especially when the market is trending positively
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How does that work with what you said before?
I assume it’s still under pressure and that it seems it would go further down with the way the market is acting.
Andy
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Can’t predict the direction, but will note that it is extremely interesting and very unique since it is also Max Pain week. Unique and interesting since the option risk to market makers has largely been neutralized by the downturn. Kinda eliminates the push for them to bring down levels. Actually gives them incentive to stabilize the drop.
Haven’t had time to look at in detail, but will by next week to see how this plays out. Will follow with curiosity and to learn.
Lakedog
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With Israel attacking Iran it looks like we will have another down day tomorrow also. It will be interesting to see what happens with the markets next week.
Andy
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World stress certainly doesn’t help. Iran seems to be down-playing and not bristling which may help. Down early but the detail is in the finish for the day. NFLX probably a bigger influence for today, so much for beating estimates. VIX a longer term concern, trying to creep up.
But it’s all about the close…
Lakedog
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I brought up the power trend because IBD was pointing out that it was likely to end to today because the 21dma will certainly move below the 50dma. As of this moment, that is true. It is no coincidence that the market has been under pressure and the 21dma has been moving down and the trend will end.
The point of the power trend is that their back testing has shown that when it is in effect, the probabilities for success are higher. That is common sense as the 21dma will not maintain above the 50dma unless the market continues up. I would bet that every good bull rally has seen a prolonged power trend.
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I found this graphic I captured from a video session back on 3/8/24. They were showing it had been a long power trend, but many were longer. It did end on 4/18/24
FYI, a new power trend on the S&P started 8/31/24. That is another show of strength for the market. Want to see Naz confirm it as well.
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10/2/24 This power trend came "under pressure" not long ago and I forgot about this thread.
Currently I believe it is back for SPY and Naz. A couple days ago IBD team said it would be officially “back on” if we had one more up day close, and that seemed to have happened. The 50dma also needs to be headed up at the same time, but not sure the Naz 50dma actually completed that requirement. Will post if I hear more.
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8/1/25 - In this night’s video, Webby documented the lengths of the longest periods of lows above the 21dma so we can see if we are really getting long in the tooth, we are at 63 days. (so not directly a power trend thing)
Transcript:
…let’s see where we’re at, at that point versus things historically. And we were in the 98th to 99th percentile. So that was also telling me, okay, yes, I think we were at, when we were doing this, we were at 60, I think we ended up at like 63 days, give or take that our low is above the 21 day and our extreme, I believe was 109 days. So, there weren’t many that were above this, it was 109 days.
9/26/80, that was your longest one at 109 days.
12/13/82, 80 days.
2/8/93, 79 days.
8/12/97, 73 days.
6/19/78, 72 days.
4/25/91, 69 days.
Then you get underneath this, which was January 12th, 99 at 60 days, August 1st, 23 at 60 days. And then when we ran this on July 28th of this year, it was 60 days at that point. So those are the only times that they were longer and when the two of us started looking at those, we’re like, wow, when they come in and we’re gonna look at those, some of those in a few minutes, there was kind of a character change. So when I saw that and I knew where we were, and that’s why we like to use precedent analysis, sure we could have gone to 109 days, but we were really pushing it. So you can’t stay above the 21 day for a million days. They have to come down and test it, that’s a sad truth.
