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Lawrence McDonald is the New York Times Bestselling Author of “A Colossal Failure of Common Sense” – The Lehman Brothers Inside Story – one of the best-selling business books in the world, now published in 12 languages – ranked a top 20 all-time at the CFA Institute.
NASDAQ Up Volume, Telling Signs
Up volume on the NASDAQ for most of the 1st quarter 2021 was spectacular. The Fed was pumping away at $120 billion a month as far as the eye could see, enticing speculators into an orgy of rampant excess.
Trying to Break Out of the Bear´s Grip
Monday was the highest up volume day on the NASDAQ since then. Interestingly, that up volume came after a real smash in many speculative names, a true bear market for over 50% of NASDAQ stocks. This was profit-taking by short-sellers, not the start of a new bull market. It was short – risk-off, not long risk on. As well, it served to relieve an over-extended, over-sold decline. That´s what bear markets do to set up another leg down. If we don´t get real follow-through upside soon, then this relief rally will prove a prelude to further pain. Ultimately, the question facing traders: was the Monday up volume surge a prelude to a new extended bull run, or a prelude to a new bear decline? We side with the latter.