Bending but not breaking

Stock markets were clearly under pressure most of the week. But Friday’s rally pushed the S&P and Nasdaq into the green for the week. That’s quite remarkable given the news stream. Looks like somebody is buying. The market is bending but not breaking.
Let’s have a look at the Nasdaq (click for larger image):


Nasdaq has been building a base near 4325 with 5 touches in the last 6 trading days. Can it now rally from this level?
My Earl indicator is turning up from a triple bottom and the slower Earl2 is entering bottom territory but not turning up yet. MoM indicator is close to the blue depressed zone, but also not turning up yet. This means a rally from current levels is certainly feasible. And we will be starting a new lunar green period later this week.
On the downside, the blue long term trend line is an important hold, currently around 4300. Market may continue in muddle through mode until this blue line gets touched. If the 4300 level doesn’t hold the market then a further drop to 4000 becomes very likely.

All in all I am mildly positive for the next few weeks, and the scenario for a climb to 4500+ is still valid. A close below 4300 would cloud the outlook significantly.

Good luck,


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: Logo

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

Facebook photo

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

Connecting to %s

%d bloggers like this: