LunaticTrader

Investing with the Moon

Outlook January 17

Posted by Danny on January 17, 2011

So far the market is not bothering about being in Red Period. The Nasdaq has kept going up last week, and is now breaking out above the trendline we have been mentioning for a while.

Here is a somewhat longer term Nasdaq chart showing it clearly (click for full size image):

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So what do we make of this?

Market action suggests that the path of least resistance remains UP.
The Nasdaq 100 Index has already gone above its 2007 highs, which means that the 2008-2009 financial crisis is being left behind, at least form the market perspective.
Market momentum (shown at the bottom of the chart) is still divergent, but at least it is turning upwards now.

I am looking for some consolidation in the market this week, since we are still in a Red Period, but if we can hold on to most of the recent market gains, then we will set up for a further rise into early February.
There is actually space for an upward acceleration here, because of the current breakout above major resistance.
The Nasdaq could get close to 3000 within of weeks.

This means I will be using this week to reduce bearish positions on any weak day, and prepare for a further rise.
This scenario would be invalidated if the Nasdaq Composite drops below 2670, so that’s where I keep my stop-loss.

Good Luck, Danny

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