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Digesting gains

Posted by Dan on February 23, 2015

When I wrote a few weeks ago that the Nasdaq was all set for a move to 5000, I got responses like “Really ??”. But here we are, the Nasdaq gained 212 points in the lunar green period that just ended, and the 5000 level is within reach. Of course, we are now entering a lunar red period, so celebrating new records on the Nasdaq may have to wait a little bit.

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


This has been a great move off the January lows. But I think we will get some consolidation just below the 5000 level before marching on in March.
Technically the MoM indicator is reaching the +8 very optimistic range. The slow Earl2 (orange line) is still heading higher, but the faster Earl (blue line) appears to be turning lower already. We may see the 5000 being exceeded this week already, because those psychological barriers do their magic. But a new lunar red period plus an Earl indicator that turns down suggests at least a brief pause in the market first. A few flat weeks would set the stage for further gains in March and April, with 5300+ as a possible target.

Good luck,

4 Responses to “Digesting gains”

  1. Petr Vales profit in newsletters said

    Hi i try tu understand your reversal level .. why do you have Loss(red collor) if you are in profit ? long …recommend from 1 of March ..

    Westamerica Bancorp. WABC 43.47 13 42.74 ▲ 0.06 1 -1.47% 13 w

    • Danny said

      Hi Petr,

      This was a buy signal given in the reversal levels for March 13. So then you can buy the stock at the Open on that day. WABC opened at $44.12 on March 13, so that’s the entry price we use for calculating the profit or loss for as long as the given trade lasts.
      => WABC closed at $43.47 on that day, which was down 1.47% from trade entry.
      Thus you find in reversal levels for the next day that the trade has been open for 1 day and is -1.47%

      Westamerica Bancorp. WABC 43.47 13 42.74 ▲ 0.06 1 -1.47% 13 w

      In today reversal levels you can find this:

      Westamerica Bancorp. WABC 43.59 13 42.86 ▲ 0.84 4 -1.20% 13 w
      The trade is now on for 4 days and it is down 1.2% at the moment. Meanwhile the reversal level is at $42.86, so if the stock makes a close below that level it would give a sell signal and we would get out of the stock for a small loss.

      Does that help with your question?


      • Petr V said

        yes now is clear for me.

        And what doest mean if loss or profit is in red frame ( box) not green ?

        best regards

        Petr V

      • Danny said

        Hi Petr,

        The main article explaining everything in the reversal level tables is here:
        When the stock is in red mode (bearish) it is expected to go down, so profit/loss is calculated accordingly. Even though not everybody is into short selling it can also be seen as the losses you avoid by selling when Mode turns red.


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