The Nasdaq plunges on Friday – but it’s still bullish

The Nasdaq Composite tumbled on Friday after it had been at the top of its bullish trend channel for the previous six trading days. The S&P and Dow continued their wedge patterns.This wedge pattern is caused by highs in the Dow and S&P not keeping pace with the advance of the lows. This is strong evidence of market weakness. The Nasdaq’s drop took out only the six previous days. Demand pushed up the close and the bottom was well above the bullish trend line. Volume was very high in the Nasdaq; I read this as very strong selling power that is, so far, matched by demand.

My relative-strength sector table shows big sudden losses in the Technology Group and the Computer Software and Semiconductor sectors in particular. Both these sectors had been very high until the quick and powerful drop on Friday took both to losses.

Here are the 3-year sales growth figures for the Transportation Sector, possibly it’s a view into the real economy.

Symbol 3-Year Sales Growth
UAL 7%
FDX 7%
NSC -6%
UNP -6%
UPS 3%
CSX -5%

The average is just 0.6%. In “U.S. Weeks Away From A Recession According To Latest Loan Data” by Tyler Durdon writing in Zero Hedge, says that growth in commercial loans is slowing – from about 7% in the beginning of the year to only 1.6% currently – for the lowest pace since 2011.

Here is the Nasdaq Composite:

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