Chart of the Day - Friday, July 21, 2023

Today's Chart of the Day was shared by Michael Nauss (@MichaelNaussCMT). The Nasdaq 100 was the only major index that closed lower this week, falling -0.90%. Michael points out that the long tail on this week's candle indicates short-term exhaustion. It makes sense that $380 is proving to be resistance for $QQQ, as dip-buyers were murdered at this level in 2022 when the prior bull market ended. $380 acted as support three times before eventually breaking in January 2022. From there, it slid -30%, leaving a lot of dead bodies or overhead supply at $380. After a historic rally in the first half of 2023, the Nasdaq can afford some short-term weakness. A digestion period could be considered healthy and necessary to sustain a long-term uptrend. Also, the Nasdaq seems to be passing the baton to the Dow and Russell 2000, allowing these two laggards to potentially catch up to the tech-heavy leaders (Nasdaq & S&P 500).