Now at 4 distrubution days on Naz and S&P. We have had more without being in “uptrend under pressure”, but those were a lot of small moves. Recently the moves have been much bigger. Those that have part of their portfolio in short to intermediate term growth speculation will want to raise cash. This board does not play that game, Saul and others are 100% long. This forces you to evaluate and reallocate holding to take advantage of great stocks that were hit harder than your other great stocks.
…The Nasdaq just barely closed above its 50-day moving average, a line the other indexes have already lost. This is not the way bulls had hoped the current uptrend would develop.
The market uptrend is now under pressure, which means investors must be more cautious. Taking some profits makes sense, and new stock purchases should be limited.
In some ways, the rough progress after the follow-through day was to be expected. The market moved into correction in early February with sharp vertical spikes. Bulls would rather see a more controlled descent. When indexes knife below the 50-day line so sharply, follow-throughs have a tendency to not work so well.
Everyone got happier when Powell said wage inflation was not an issue, the market bounced. Then Trump talked tarriffs and people started thinking Smoot-Hawley tarrifs and tradewars that helped lead to the great depression.
Meanwhile, the technical picture for the stock market crumbled. Thursday marked the third distribution day in a row for the Nasdaq and the S&P 500.
Distribution involves a price loss in rising volume and points to institutional selling.
The put-call volume ratio provided the day’s lone bright spot. The ratio closed at 1.17. Readings of 1.15 or higher often coincide with short-term market bottoms.