It’s time to brace for a shakeout, according to BTIG. The market is flaring some near-term warning signals. As of Sunday, the Nasdaq 100 — which is comprised of the 100 largest companies excluding financials in the Nasdaq stock exchange — has gone 60 straight trading days without closing below its 20 day moving average, a short-term trend indicator. That’s a troubling signal when you consider the last time the Nasdaq 100 sustained this sort of momentum was back in 1999, a little before the dot-com bubble burst. “The Nasdaq 100 has now gone 60 trading days without closing below its 20 DMA, the second-longest streak in its history (back to 1985). The longest was ended in early 1999,” Jonathan Krinsky, chief market technician at BTIG, wrote in a Sunday note titled “Fasten Your Seatbelts.” “The main takeaway is that we may encounter some turbulence, even though it’s unlikely to mark a major peak,” Krinsky wrote. .NDX YTD mountain Nasdaq 100, year to date That word of caution comes with both the S & P 500 and Nasdaq Composite kicking off the week at record highs , once again, in spite of concerns ahead around the Aug. 1 trade deadline, and whether the Federal Reserve will or won’t lower interest rates in their meeting next week. Earnings season is also expected to add to individual stock volatility. However, with reversal indicators showing signs of peaking, and seasonal trends weakening, the technical setup is starting to suggest greater unruliness lies ahead. Wall Street’s fear gauge — the CBOE Volatility Index — has been notably quiet all month. Greater turbulence could be especially troubling for more risky assets, such as the ARK Innovation ETF , which has rallied more than 12% this month defying fears of a pullback. “We have clearly been offsides on the ARKK move, thinking a pullback was due for the last few weeks. With that said, relative to the 100 DMA it’s now 38% above, only exceeded during a brief period in July ’20,” Krinsky wrote. “We continue to think a shakeout is overdue.” The technician expects that investors could rotate into utilities. He said the Utilities Select Sector SPDR Fund has “prebreakout potential” that can carry it to the low $90s from around $84 where it was last hovering.
