In this article i’m going to look at what position the markets are in, with a view to helping you determine the best stocks to buy now. I’m going to examine the position of the overall index and recent highs and lows, and any recent patterns forming. Let’s get straight into it!
Best stocks to buy now – the NASDAQ – recent activity
It helps when considering which are the best stocks to buy now, to look at the overall index first – to see what’s happening there. Reason? Because the overall index has an influence on the prices of its constituents and vice versa. It helps you see clearly, in one big swoop, what’s happening to the markets in general currently. The NASDAQ is the average of the top 100 stocks in America and it is heavily weighted in the Technology sector, with constituents like Apple, Google and Microsoft sitting on it.
NASDAQ monthly timeframe:
Let’s take a look at the NASDAQ per the monthly timeframe. I’m using the Trading View chart software – click below for a discount:
As you can see on the monthly timeframe, the markets had recently pushed up to new overall highs and they are now pulling back. This is paramount information and consideration before you decide on the best stocks to buy now. The MACD indicator has gone from strong upwards momentum, dark green histogram bars to smaller, reducing in size, light green bars. This pattern is typical before it turns red. You can see where the MACD indicator went red previously on this time frame and what happened to the price. A further downwards push is not guaranteed – nothing is! As traders we are trying to look at patterns on the chart to see what might be possible in the near future. The RSI has pulled back considerably on this time frame. If you would like to understand more about these indicators, please see my blog articles below:
Now let’s take a look at the daily timeframe:
Looking at the daily timeframe, is like zooming in, on the monthly. It shows you a close up of what’s going on. To understand how to use Multiple Timeframe Analysis in your trading, please see the following blog article:
As you can see on the daily timeframe chart, the price is holding firm above the white support line at around 23,945. It has touched this line quite a few times, tried to push down through it, and then popped back up again. The market is consolidating and going sideways. Often times when a market is bouncing along sideways, it is gaining momentum to either push up strongly or pull back significantly. It is unknown which way it will go. The FEDS dropped interest rates which can help the markets push up further – historically this is what happened after interest rates were reduced. However, the markets are very overbought in general – all the stocks and commodities have reached record highs and it is not clear how long this upwards drive will last! What goes up, must come down – at least slightly!
The last candle which formed, was a large downward candle, taking the price back down close to the support level. To understand more about support and resistance levels, please see this blog article:
Let’s just throw in the S&P 500 for good measure!
As you can see, we have a similar story on the S&P 500…
From examining these indices, my own decision is to wait before considering the best stocks to buy now. I want to see which direction the markets are headed in, in general, before jumping into anything. There may be markets/stocks sitting on these indices which are still pushing up right now and this is what’s holding it up but i’m conscious of what I stated earlier, that the index has an overall impact on the direction of the stocks, and vice versa. I want the odds to be in my favour when I open more positions. So I will wait to see what happens for a while.
What am I waiting for?
Before I can decide on the best stocks to buy now, I’m waiting for the markets to break out of the sideways channel they are in (i.e. the Index). If they break out upwards, I may consider that a new pattern is starting to form (with reference to new consistent support levels being in a diagonal push up or a new clear horizontal level being established which it is now clearly a new support), and look for good markets / stocks to get into. If they burst downwards I will be waiting even longer – until they start to push up again. For now, I just wait…
He that can have patience can have what he will.” —Benjamin Franklin
Let’s generate wealth, independently, together!
Disclaimer!
Nothing on this blog should be taken as financial advice or encouragement for you to enter a trade. You are expected to speak to a financial adviser or carry out your own due diligence before entering any positions. Everything on this blog is made for educational purposes and to equip you with the knowledge you need to be able to make your own financial decisions.
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