Weekly Market Commentary: Nasdaq Breakout

All indices are in breakout mode. The Nasdaq finally cracked 3,200 resistance which had kept it pegged back. The Russell 2000 and S&P also started to add new legs to their breakouts. However, the bounce in breadth hasn't reversed the bearish divergence, which suggests an end-phase run.

New support for the Nasdaq breakout is 3,100.

The Russell 2000 paused for a couple of week before resuming its advance.  New support for this index is set at 900.

The S&P managed a support backtest last week, before powering ahead this week. Stop on a loss of 1,475.

The Percentage of Nasdaq Stocks above the 50-day MA recovered to 67% (from just over 55%), but it's a long way from the 80% level of a few weeks back.  The recovery in this breadth metric could not prevent a 'sell' trigger in stochastics (with a MACD 'sell' likely to follow next week). In all likelihood, a larger bearish divergence will emerge. This will likely mean further gains - likely to last a number of weeks - before a 10%+ correction takes hold.  Currently. it's a good time for short term long trades, but not a great time to be buying for long term long trades. Bulls have the edge.

To determine when this top may fall into place, look for a Nasdaq Summation Index above 600.

With Nasdaq Bullish Percents around 72.5%.

When these conditions are met, look to sell.


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Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com. You can read what others are saying about Zignals on Investimonials.com.


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