What to make of those new highs?

Markets pushed higher last week and many market indices reached new highs. Our LT wave chart for September indicated strength around the 16th, so yesterday may have been the high for the month. Where do we go from here?

Let’s have a look at the Nasdaq chart (click for larger image):


We have another week of lunar red period to go, and the current technical setup also points to an imminent correction.
The Earl indicator has topped out, leaving a bearish divergence on the chart. And the MoM indicator is stalling near +6.5, well into the optimistic zone.
But the slower Earl2 has made a bottom already, so we may get a rather shallow correction once again. A drop to 3650 might be all we get.
If the Nasdaq falls below 3570, then it would become more interesting for those who are bearish on the market. Such a drop remains possible, but it is no longer my preferred scenario given how easily the market has come back from the correction that started in August.
If we do not see a significant drop between now and mid October, then I think the next major correction will be pushed out into 2014.

Good luck,

Enhanced by Zemanta

By Dan

Author of LunaticTrader and Reversal Levels method. Stock market forecasts based on proprietary indicators, seasonal patterns and moon cycles.

Leave a comment

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: