From: Fallondpicks.com


A quiet close to a quiet week which will have nicely satisfied the bulls. The NASDAQ had the most interesting action as the 2,330 target many commentators were speculating as an upside target was handily met. Bulls will be looking at the tantalizing proposition of 2,850-3,000 (the next resistance level after 2,330). It looks far fetched, but there are enough skeptics out there (me included) to drive such a rally. However, I don't see enough room in the secondary tech indicators [$NASI, $NAA50 and $BPCOMPQ] as they stand now to fuel the current advance to this level, but if the next 3-4 month correction was to sharply reset these indicators to deeply oversold levels (e.g. a $NASI around -900, a $NAA50 in the 300s, and a $BPCOMPQ in the 30s) with a corresponding retracement in the NASDAQ to 2,000 or higher then I wouldn't be laughing. The NASDAQ 100 is not as well placed as the NASDAQ with 2,074 resistance still in play, and although the semiconductor index has performed a admirably in recent weeks its long term chart shows plentiful resistance at 560, 642, 711, and 763. Look to latter semiconductor resistance to impinge upon the NASDAQ 100 more so than the NASDAQ.

Also helping the bulls was the Russell 2000 which pushed to new multi-year highs. With small caps leading the markets, bulls are safe from bearish advances. Although the CCI of the Russell 2000 (last indicator on the chart) is overbought and diverging to price there is little weakness in the other technical parameters to suggest this will turn sharply down. I am less concerned with the action in the large caps [Dow and S&P] as leadership comes in the shape of tech and small caps. The Dow bounced a few points above Fibonacci levels while the S&P closed on a small, but weak, bullish hammer.

Gold continued its charge, negating a potential double top at $542 and shifting this resistance level into support. Silver has yet to follow gold's lead as it fights its $9.27 double top. Silver stocks look better value (SIL in particular, but PAAS and SSRI should not be ignored), but some of the smaller mining stocks like CDE and HL could follow the lead of other stocks in this sector.

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