5th Day of Higher Lows on Nasdaq 100
With the results of the October Federal Open Market Committee just hours away and the technology indices shoving to new highs for the bull move, in light of my previous dispatch regarding a potential declining wedge on the QID, I thought I would point out that today is the fifth consecutive day of higher lows on the Nasdaq 100.
While the day is far from over and the market primed for increased volatility when the FOMC’s interest rate decision is announced (FWIW, I think they do 50 basis points or they don’t move at all), should the market fail to put in a intraday low below yesterday’s low, the odds of a lower low tomorrow — and confirmation of a break out and up on the QID declining wedge — increases measurably.
Since the bear market lows in October 2002, on eleven occasions the NDX has traded for more than five consecutive days without piercing through the previous day’s low. On twelve occasions, the NDX’s streak of higher lows concluded after the fifth consecutive day. Now this obviously doesn’t sound like a indicator with high reliability — onward and upward 11 times, break lows 12 times — however the 23 occurrences of a streak of five or more days of consecutive higher lows is sort of an anomalous situation in and of itself.
With all of that said, I anticipate a lower low today or tomorrow. An event, if combined with a significant decline, will likely confirm the break out and down of the rising wedge on the NDX and break out and up of the declining wedge on the QID.
Below you will find a chart of the NDX tracking both consecutive higher lows (green) and lower highs (red). I annotated the indicator with a horizontal line at the level of 5 days. The histogram turns blue on instances of greater than five days of consecutive higher lows.
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