Ready for new highs

Markets climbed nicely last week, ending the lunar green period with a 22 point gain on the Nasdaq. Nevertheless, it is an hesitant start to the year and it will be interesting to see how it continues in the next weeks. Let’s have a look at the Nasdaq chart (click image to enlarge it):


We have a triple bottom near 4550 and the market continues to be in a sideways pattern since the end of November. A big move is likely once the Nasdaq breaks out of this sideways pattern. My technical indicators have gradually come down from the overbought levels they reached in November. That means we are slowly setting up for possible climb towards 5000+ on the condition that the support near 4550 is not given up.
I think we will see some further hesitation in the lunar red period that is now starting, and then the start of another push higher. Bonds have reached such low yields that they are becoming utterly unattractive as a long term investment. If some of that money starts flowing into stocks, many of them yielding more than 2%, then a stock market rally will become hard to stop.

Good luck,

By Dan

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

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