The week began with a new all-time high on Monday that turned into a sell-off which tested the 12,000 area. The support held and the index recovered , closing the day with a small loss. That test proved to be a character builder for a week that would bring quite a few challenges.
The short week of trading ended with a +2.96% gain for the Nasdaq (IXIC), outperforming the S&P 500 ( SPX +2.27) and the Dow Jones Industrial (DJI +2.21%) average. The Russell 2000 (+3.92%) is still outperforming everything as investors focus on small-caps . The major indexes set new all-time highs this week.
The week ended almost exactly where it started. A weekly doji candlestick representing a trading range of about 1.5% shows how tightly the market traded to complete an inside week and close within the 0.55% range of the last three weekly closes.
The week of rotations. If your week started the same as mine, it was early Monday morning, and I was putting in my typical orders to create new positions in my favorite growth stocks. The election seemed behind us and it was time for the post-election rally. And then it happened.
The previous week was the worst since March, so why not follow it up with the best week since April. The Nasdaq closed the week with +9.01% gains. The index regained all key support levels and tempted the highs of 10/12 where it had previously pivoted down. The change in momentum came as investors realized the “blue wave” they previously predicted would not happen and their would at least be a Republican senate to temper any radical changes proposed by a Democratic Whitehouse.
It was another tough week, especially if you are a bullish growth investor. There were so many things that could have gone well, from positive earnings beats to the good economic news. But nothing, not even the over the top performance of Social Media stocks (Snap, Pinterest, Facebook , Twitter ) could hold up through the week.
The Nasdaq Week in Review is my weekend homework where I look over what happened in the previous week and what might come in the next week. It helps me evaluate my observations, recognize new data points, and make a plan for possible scenarios in the near future.
The week brought some mixed signals. There were positives. Although it was disappointing to pull back from Monday’s highs, the market needed to settle back down from the accelerated gains of the last few weeks. There are some positive signs.