Posted by Danny on October 28, 2013
Markets are building on their recent breakout to new highs.
The most recent lunar red period ended with big gains for the major stock indexes, and now we are in an eclipse green period. Historically stocks have done very well in eclipse green periods. That doesn’t mean further gains are guaranteed, but we definitely shouldn’t rule out even higher highs ahead in the next weeks and months.
Let’s have a look at the Nasdaq chart (click for larger image):
The breakout is clearly visible on the chart, and after some brief consolidation the Nasdaq is now pushing towards the 4000 level.
The shorter term Earl and the MoM indicator are rather overbought, so more consolidation is not unlikely, but the slower Earl2 has just emerged from a narrowing triangle and has quite a bit more room to run.
I think shorter term we will see some hesitation near the 4000 level, but once that hurdle is taken the Nasdaq can go as high as 4150-4200, where overhead resistance would be met.
It wouldn’t surprise me if we end the year near those levels.