We’ve seen a strong market over the last few weeks, which has made for some good trades in the Compounding Growth Mastery. The market is now trading at 2+ average true ranges (ATR) above the daily mean. We are seeing signs of exhaustion, meaning that we are no longer seeing buy signals on the Big 3 indicator.
These lower timeframe buy signals can trigger a push to the 21 exponential moving average (EMA). When the Big 3 indicator transitions from bullish to neutral on the 30-min, 2-hr, and other lower timeframes, there is a growing probability that names will drop back to the 21 EMA.
Both the Nasdaq (QQQ) and S&P 500 (SPX) are down slightly on Friday, showing signs of exhaustion, and appear ready for a push back to the 21 EMA.
The market hasn’t traded at the daily 21 EMA in about a month. Now that the buy signals have gone away, it’s a sign that the bulls are running out of gas.
The big question now is if we see names in the financial and technology sectors finally pull back to the 21 EMA.
In the video above, we’ll review what we’re looking for in the event we see a pullback to the 21 EMA.
Stay Focused!