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NASDAQ COMPOSITE'S INTERNAL WEAKNESS INTENSIFIES (0900 EDT/1300 GMT)
The Nasdaq Composite ended Friday down a little more than 2% from its Sept. 7 record close. This after one measure of internal strength had diverged into that high:
The Nasdaq New High/New Low (NH/NL) index stalled on Sept. 7 at 74.5%. This reading was well below its mid-June peak of 90.2%, as well as its mid-January high of 96.4%. The measure has since weakened to 45.4%.
Of note, just looking back to early 2020, periods of NH/NL index divergence has preceded both major and minor IXIC setbacks.
And recently, despite the Nasdaq's more than 2% bounce off its Sept. 20 low, the NH/NL index has continued to deteriorate, questioning the sustainability of the rise.
Now, in premarket trade, CME e-mini Nasdaq 100 futures are suggesting the Nasdaq 100 is poised to decline more than 125 points, or around 0.9%, at the open.
With this, the Composite should come under pressure, and the next test for the NH/NL index can be its late-summer troughs in the 41.2%/37.1% area.
(Terence Gabriel is a Reuters market analyst. The views expressed are his own)