In this week’s Stock Market Update, Mike Webster pointed out that the Nasdaq is now in a Power Trend. In this post we’ll look at what characteristics make up a Power Trend and we’ll also dive into three examples, two from dates in the past as well as the specifics of the current Power Trend.
Here are the primary considerations for a market to be considered in a Power Trend.
- Low above the 21-day for 10 consecutive days
- 21-day above the 50-day for five days
- 50-day in an uptrend
Once the 21-day crosses below the 50-day that is a sign the trend may be coming to an end. Mike also mentioned there are “circuit-breaker rules” that can end a PT before the 21-day to 50-day crossover.
It should be noted, I am using the Nasdaq for all the charts that follow.
2016 to 2018 Power Trend
A monster Power Trend began in November of 2016. This trend continued until February of 2018. That’s an impressive 60+ weeks!
Second Power Trend in 2018
2018 saw a second Power Trend, starting at the end of May and going into October.
May of 2020, Power Trend
Beginning on May 8th, we entered a Power Trend.
More Power Trend Examples
In addition to the dates above, here are three more Power Trends to research:
- Jan. 31, 2019, to May 22, 2019
- July 3, 2019, to Aug. 14, 2019
- Oct. 24, 2019, to Feb. 27, 2020
Follow the discussion on Power Trends:
In the latest edition of @mwebster1971's Weekend Stock Market Update, it was mentioned we are now in a Power Trend.— John Muchow (@JohnMuchow) May 10, 2020
I've created three charts showing how to locate a Power Trend in @MarketSmith. https://t.co/qJfIEZIyBW@IBDinvestors