{"id":10282,"date":"2022-02-25T13:39:02","date_gmt":"2022-02-25T18:39:02","guid":{"rendered":"https:\/\/morpheustrading.com\/blog\/?p=10282"},"modified":"2023-01-23T12:31:29","modified_gmt":"2023-01-23T17:31:29","slug":"nasdaq-bottom-2022","status":"publish","type":"post","link":"https:\/\/morpheustrading.com\/blog\/nasdaq-bottom-2022\/","title":{"rendered":"Is the Nasdaq Forming a Significant Bottom Now?"},"content":{"rendered":"\n<figure class=\"wp-block-image size-medium is-resized\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/new.morpheustrading.com\/blog\/wp-content\/uploads\/2022\/02\/bottom-300x169.jpeg\" alt=\"market bottom\" class=\"wp-image-10288\" width=\"717\" height=\"403\" title=\"\" srcset=\"https:\/\/morpheustrading.com\/blog\/wp-content\/uploads\/2022\/02\/bottom-300x169.jpeg 300w, https:\/\/morpheustrading.com\/blog\/wp-content\/uploads\/2022\/02\/bottom-1024x576.jpeg 1024w, https:\/\/morpheustrading.com\/blog\/wp-content\/uploads\/2022\/02\/bottom-110x62.jpeg 110w, https:\/\/morpheustrading.com\/blog\/wp-content\/uploads\/2022\/02\/bottom-768x432.jpeg 768w\" sizes=\"auto, (max-width: 717px) 100vw, 717px\" \/><\/figure>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">TABLE OF CONTENTS<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/morpheustrading.com\/blog\/nasdaq-bottom-2022\/#After_weeks_of_heavy_selling_the_Nasdaq_has_formed_a_bullish_reversal_pattern_Will_the_rally_attempt_have_legs\" >After weeks of heavy selling, the Nasdaq has formed a bullish reversal pattern. Will the rally attempt have legs?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/morpheustrading.com\/blog\/nasdaq-bottom-2022\/#Continue_reading_to_discover_four_simple_reliable_signals_to_know_when_the_market_may_be_forming_a_significant_bottom\" >Continue reading to discover four simple, reliable signals to know when the market may be forming a significant bottom.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/morpheustrading.com\/blog\/nasdaq-bottom-2022\/#Will_the_bullish_reversal_have_legs\" >Will the bullish reversal have legs?<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/morpheustrading.com\/blog\/nasdaq-bottom-2022\/#4_Key_Signals_to_Look_for_a_Potential_Market_Bottom\" >4 Key Signals to Look for a Potential Market Bottom<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/morpheustrading.com\/blog\/nasdaq-bottom-2022\/#3_charts_of_previous_Nasdaq_bottoming_action\" >3 charts of previous Nasdaq bottoming action<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/morpheustrading.com\/blog\/nasdaq-bottom-2022\/#Nasdaq_%E2%80%93_February_2016_bottom\" >Nasdaq &#8211; February 2016 bottom<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/morpheustrading.com\/blog\/nasdaq-bottom-2022\/#Nasdaq_%E2%80%93_December_2018_bottom\" >Nasdaq &#8211; December 2018 bottom<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/morpheustrading.com\/blog\/nasdaq-bottom-2022\/#Nasdaq_%E2%80%93_March_2020_bottom\" >Nasdaq &#8211; March 2020 bottom<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/morpheustrading.com\/blog\/nasdaq-bottom-2022\/#The_Trading_Plan\" >The Trading Plan<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"After_weeks_of_heavy_selling_the_Nasdaq_has_formed_a_bullish_reversal_pattern_Will_the_rally_attempt_have_legs\"><\/span>After weeks of heavy selling, the Nasdaq has formed a bullish reversal pattern. Will the rally attempt have legs? <br \/><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Continue_reading_to_discover_four_simple_reliable_signals_to_know_when_the_market_may_be_forming_a_significant_bottom\"><\/span>Continue reading to discover four simple, reliable signals to know when the market may be forming a significant bottom.<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>In the February 24 issue of <em><a href=\"https:\/\/morpheustrading.com\/services\/swing-trade-alerts\" target=\"_blank\" rel=\"noreferrer noopener\">The Wagner Daily<\/a> t<\/em>hat we sent to members on Wednesday evening, we discussed the possibility of a <em>gap-down reversal<\/em>  in the next session.<\/p>\n\n\n\n<p>Fueled by initial selling pressure from the announcement of war in Ukraine, US stock futures were down more than 2% in after-hours trading.<\/p>\n\n\n\n<p>This news-driven gap down was already following a two-week selloff in the Nasdaq and S&amp;P, and caused the major indices to undercut support of a major prior low.<\/p>\n\n\n\n<p>All of this set the stage for a bullish reversal on open&#8211;though we certainly did not expect such a massive advance!<\/p>\n\n\n\n<p>The Nasdaq Composite gained +3.3% for the day, as volume ticked higher as well.<\/p>\n\n\n\n<p>Even more impressive is that the Nasdaq rallied <em>7% off the day&#8217;s low<\/em> and almost formed a bullish engulfing day!<\/p>\n\n\n\n<p>The big green candle on the chart below shows the  Nasdaq&#8217;s huge gap down, below the prior January lows, followed by the huge reversal higher:<\/p>\n\n\n\n<figure class=\"wp-block-image is-resized\"><a href=\"https:\/\/www.morpheustrading.com\/~rick\/\/charts\/2021\/220225IXIC.png\" target=\"_blank\" rel=\"noopener\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/www.morpheustrading.com\/~rick\/\/charts\/2021\/220225IXIC.png\" alt=\"$Nasdaq COmposite Daily\" width=\"731\" height=\"477\" title=\"\"><\/a><figcaption class=\"wp-element-caption\"><em>Press image to view full-sized chart<\/em><\/figcaption><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Will_the_bullish_reversal_have_legs\"><\/span>Will the bullish reversal have legs?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>In order to help determine if a market index like the Nasdaq may be forming a significant bottom, we look out for four key signals below:<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"4_Key_Signals_to_Look_for_a_Potential_Market_Bottom\"><\/span>4 Key Signals to Look for a Potential Market Bottom<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Higher lows &#8211; <\/strong>The market index should hold the low set on day one of the new rally attempt.<\/li>\n\n\n\n<li><strong>Moving averages &#8211; <\/strong>The index must reclaim its 10-day moving average, and eventually reclaim the 20-day EMA within a few weeks.<\/li>\n\n\n\n<li><strong>Follow-through day &#8211;<\/strong> A <em>follow-through day<\/em> buy signal (explained below) must occur on day 4 or later after the start of a new rally attempt (may occur before or after the index reclaims the 20-day EMA). <\/li>\n\n\n\n<li><strong>New leadership &#8211; <\/strong>A small group of stocks will start to emerge as new leaders by showing top relative strength to confirm the fresh new buy signal.<\/li>\n<\/ol>\n\n\n\n<p>The <a href=\"https:\/\/www.investors.com\/how-to-invest\/investors-corner\/what-is-a-follow-through-day\/\" target=\"_blank\" rel=\"noreferrer noopener\">IBD follow-through day<\/a> occurs when a market index gains at least +1.5% <em>on higher volume<\/em> on day 4 or later after a bullish reversal off the low. <\/p>\n\n\n\n<p>Although the well-known follow-through day is still a valid buy signal, we place <em>more weight on the index also reclaiming the 20-day EMA. <\/em><\/p>\n\n\n\n<p><iframe loading=\"lazy\" width=\"580\" height=\"680\" src=\"https:\/\/4966a6ff.sibforms.com\/serve\/MUIFAOyl4S5Qdajs7q3LemJKudDbMHB24p2SAorKuWWuauy3e1eFPtLgTh5BoPCh3XzIz3rZE_YyIqvc9IEl_xMkRg3MTlG0Zn5eqY3J2eKMjOE-jPuS43ZXewKssUaGt1kllR56wV2u1lBXoYfKSzEgeeTjLyjdSao87VmqsbDtgcy4jNwHMSzf0Rl346rIoBjtZwf-DX0V6tbn\" frameborder=\"0\" scrolling=\"auto\" allowfullscreen style=\"display: block;margin-left: auto;margin-right: auto;max-width: 100%;\"><\/iframe><\/p>\n\n\n\n<p><strong>Good things tend to happen once an index is above the 20-day EMA, so there is no need to rush to buy.<\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"3_charts_of_previous_Nasdaq_bottoming_action\"><\/span>3 charts of previous Nasdaq bottoming action<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Below are three examples of bottoming action on the Nasdaq daily charts since 2016. <\/p>\n\n\n\n<p>Of course, not every bottom will play out like these examples&#8211;these charts are just a guide.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Nasdaq_%E2%80%93_February_2016_bottom\"><\/span>Nasdaq &#8211; February 2016 bottom<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>In 2016, the Nasdaq Composite reclaimed its 20-day EMA (beige line) in four sessions:<\/p>\n\n\n\n<figure class=\"wp-block-image is-resized\"><a href=\"https:\/\/www.morpheustrading.com\/~rick\/\/charts\/2021\/220225COMP1.png\" target=\"_blank\" rel=\"noopener\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/www.morpheustrading.com\/~rick\/\/charts\/2021\/220225COMP1.png\" alt=\"$Nasdaq COmposite Daily\" width=\"731\" height=\"477\" title=\"\"><\/a><figcaption class=\"wp-element-caption\"><em>Press image to view full-sized chart<\/em><\/figcaption><\/figure>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Nasdaq_%E2%80%93_December_2018_bottom\"><\/span>Nasdaq &#8211; December 2018 bottom<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>In 2018, the Nasdaq Composite moved back above its 20-day EMA in about 8 days:<\/p>\n\n\n\n<figure class=\"wp-block-image is-resized\"><a href=\"https:\/\/www.morpheustrading.com\/~rick\/\/charts\/2021\/220225COMP2.png\" target=\"_blank\" rel=\"noopener\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/www.morpheustrading.com\/~rick\/\/charts\/2021\/220225COMP2.png\" alt=\"$Nasdaq COmposite Daily\" width=\"731\" height=\"477\" title=\"\"><\/a><figcaption class=\"wp-element-caption\"><em>Press image to view full-sized chart<\/em><\/figcaption><\/figure>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Nasdaq_%E2%80%93_March_2020_bottom\"><\/span>Nasdaq &#8211; March 2020 bottom<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>In 2020, the Nasdaq Composite took 11 days to reclaim its 20-day EMA:<\/p>\n\n\n\n<figure class=\"wp-block-image is-resized\"><a href=\"https:\/\/www.morpheustrading.com\/~rick\/\/charts\/2021\/220225COMP3.png\" target=\"_blank\" rel=\"noopener\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/www.morpheustrading.com\/~rick\/\/charts\/2021\/220225COMP3.png\" alt=\"$Nasdaq COmposite Daily\" width=\"731\" height=\"477\" title=\"\"><\/a><figcaption class=\"wp-element-caption\"><em>Press image to view full-sized chart<\/em><\/figcaption><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"The_Trading_Plan\"><\/span>The Trading Plan<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>It&#8217;s only the second day since the Feb.24 bullish reversal day, so we do not yet have confirmation that the Nasdaq has put in a significant bottom.<\/p>\n\n\n\n<p>From here, we will be looking for a follow-through day to occur after day 4 or later of the rally.<\/p>\n\n\n\n<p>We also are looking for the Nasdaq to reclaim support of its 20-day exponential moving average, currently at the 13,910 level.<\/p>\n\n\n\n<p>Finally, we are also looking for the emergence of new leading stocks to lead the Nasdaq higher.<\/p>\n\n\n\n<p>For now, our short-term plan in the <em><strong><a href=\"https:\/\/morpheustrading.com\/services\/swing-trade-alerts\" target=\"_blank\" rel=\"noreferrer noopener\">Wagner Daily<\/a><\/strong><\/em> portfolio is to wait for some sort of low-risk buy point, such as a tight-ranged inside day in faster-moving stocks bouncing from deeply oversold levels. <\/p>\n\n\n\n<p>If the rally attempt begins to show signs of sticking, then we will focus on the more classic CANSLIM patterns such as the <a href=\"https:\/\/new.morpheustrading.com\/blog\/how-to-trade-cup-handle\/\" target=\"_blank\" rel=\"noreferrer noopener\">cup with handle<\/a>, <a href=\"https:\/\/new.morpheustrading.com\/blog\/best-stock-breakouts\/\" target=\"_blank\" rel=\"noreferrer noopener\">flat base<\/a>, or double bottom.<\/p>\n\n\n\n<p><em><strong><a href=\"https:\/\/morpheustrading.com\/services\/swing-trade-alerts\" target=\"_blank\" rel=\"noreferrer noopener\">SIGN UP NOW<\/a><\/strong> to receive our nightly stock trading report to be instantly alerted to our next explosive stock pick.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>After weeks of heavy selling, the Nasdaq has formed a bullish reversal pattern. Will the rally attempt have legs? Continue reading to discover four simple, reliable signals to know when the market may be forming a significant bottom. In the February 24 issue of The Wagner Daily that we sent to members on Wednesday evening, [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_links_to":"","_links_to_target":""},"categories":[3],"tags":[],"class_list":["post-10282","post","type-post","status-publish","format-standard","hentry","category-stock-trading-strategy"],"_links":{"self":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts\/10282","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/comments?post=10282"}],"version-history":[{"count":14,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts\/10282\/revisions"}],"predecessor-version":[{"id":15650,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts\/10282\/revisions\/15650"}],"wp:attachment":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/media?parent=10282"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/categories?post=10282"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/tags?post=10282"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}