Market Enters Daily Range
Last week the market ended mixed. The Nasdaq closed up +0.55% for the week and hit a multi-year high. But Friday, it closed down on higher volume; a test of support may occur at 4,180. The S&P closed down -0.20% after failing at a retest of the 31 December high. With two pivot highs having formed since 2 January, the S&P is now is a daily range pattern. That is consistent with the ADX reading.
ADX is low for both the Nasdaq Composite and S&P. This means contraction of range and decreased momentum. It is hard to read momentum signals when the ADX is low. The direction of the next range expansion wave will tell us a lot about the markets health. The high risk of a market market correction continues to linger, so each week must be taken in stride. Any sign of major selling would be red flag, but until then, the trend remains up long-term and intermediate-term.