Posted by Danny on January 20, 2014
Markets have continued to grind higher and are once again bumping into overhead resistance levels. Can they break out to the upside? We cannot rule it out as we are getting into a new lunar green period. But let’s first take a look at the Nasdaq chart (click for larger image):
The Nasdaq made new highs just above 4200, a target level we have been mentioning for a while. But once again we see bearish divergences in my technical indicators. So, I would remain very cautious even though we are now starting a lunar green period. Sometimes a market decline starts with weakness in a green period, followed by even more weakness in the ensuing red period. The risk to reward ratio stinks at this point, so I prefer to stay mostly in cash until we have a more attractive setup.
If a correction starts, then look for support at 4000 and then 3800.
If you missed out on our forecasts for 2014, you can find them here: http://fourpillarsfinance.wordpress.com/2014/01/17/forecast-for-2014/