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Insights into a “Remarkable” NASDAQ Development

Here’s what usually happens in the stock market when “the troops abandon the generals”

by Bob Stokes
Updated: December 06, 2021

You've probably heard the phrase: "Appearances can be deceiving."

In other words, it's usually wise to "take a closer look" because the truth may not be obvious.

This applies to various circumstances of life -- even the stock market.

For example, consider this Nov. 19 Reuters headline:

Nasdaq hits fresh record peak...

Of course, the headline appears to support a bullish outlook on the tech-heavy index.

However, after the market close that day, our U.S. Short Term Update showed this chart and said:

111921-edit

This remarkable chart encapsulates the current state of affairs. The top graph is the NASDAQ Composite from December 2020 and the bottom graph is the daily number of new 52-week lows for the index. Normally, as one would expect, when the NASDAQ declines, the daily number of members that make new 52-week lows increases. Yet, as the NASDAQ was making a new all-time high yesterday (NDX), the number of new 52-week lows surged to 425. This is the highest number of daily new lows since the market meltdown of February-March 2020. It vividly shows how concentrated the stock market rally is, with only a select number of issues pushing the NASDAQ higher. When the troops abandon the generals in the charge up the hill, retreat usually follows. [emphasis added]

The Nov. 21 U.S. Short Term Update followed up by showing this chart and saying:

112221-edit

In [the Nov. 19] Update we showed a chart of the extraordinary behavior in the number of 52-week lows on the NASDAQ. As the NASDAQ was in the process of rallying to new highs last week, the number of new 52-week lows outpaced the number of new 52-week highs for five consecutive days. Tonight's chart shows the same new low data but uses a 5-day average to accentuate the trend. "There's never been another day when so many stocks fell to new lows as the overall index climbed to a record high" in data going back two decades [referencing Nov. 18].

The new lows surge in conjunction with the NASDAQ's new high was just one indication that investors should prepare for downside price action.

The Elliott wave model is among the other indications.

Right now, the stock market's wave structure is sending a clear message that will likely be of high interest to you. Suffice it to say, this message is nothing less than historic.

Follow the link below to review our specific market forecasts now.

Historic Elliott Waves Now Unfolding: Prepare Your Portfolio

Our just-published December Elliott Wave Financial Forecast identifies a particular wave which "is sweeping across many sectors," including the stock market.

You are encouraged to learn all you can about this wave so you can position your portfolio accordingly.

Right now, investors would do well to think less about "diversification" and think more about financial safety.

Get the insights that will help you to navigate the closing weeks of 2021 and the start of 2022 by following the link below.

Financial Forecast Service

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All month long, Financial Forecast Service helps you stay ahead of the waves in the U.S. markets on the timeframes that matter the most. FFS covers the stock indexes, bonds, gold, silver, the U.S. dollar, as well as market psychology and cultural trends. It is our most popular service.

Comprises the monthly Elliott Wave Financial Forecast, 3x-per-week Short Term Update and at least 12x-per-year Elliott Wave Theorist.

EXCLUSIVE

Bitten by FANG? Clocked by Cryptos? -- 'Air Pockets' Everywhere

Down more than 25%, the NASDAQ is "officially" in bear-market territory. "Big whoop" as they used to say -- some of the hi-tech darlings have already been cut in half and then some. Bet the folks down 50% or more in their so-called investments are glad to hear they're "official." And now Bitcoin, the King of Cryptos, has hit an "air pocket" of its own and fallen below $30,000. Wonder if that's officially a bear market, too? This excerpt from our new, May Financial Forecast explains how it all fits together.

EXCLUSIVE

Bitcoin: How to Spot Signs of Fast Reversals

Bitcoin and other cryptocurrencies are no strangers to volatile, sharp reversals. If you get caught up in one unprepared, it's not a good feeling. But watch our Crypto Trader's Classroom instructor show you how Elliott waves can help take the "surprise" out of crypto "surprises."

EXCLUSIVE

EUR/USD: How to 'Trade with the Trend'

The euro vs. U.S. dollar is most-traded forex pair -- and lately, the euro has been losing, pushing EUR/USD lower and lower. At moments like that, many FX traders will try to catch the bottom. Watch our Currency Pro Service editor show you what Elliott wave evidence you need to do that with less risk.