Bulls Make Their Move On Nasdaq Mini-Breakout

After weeks of back-and-forth it looks like bulls are about to kick on off the back of a solid day of buying. The Nasdaq had the best of the action as it edged above its handle, leaving it in a zone to go challenge 20,000. The MACD is holding to a 'sell' signal, but is close to a new 'buy' signal and a return to net bullish technicals. This is looking very positive for the index, and only the lack of accumulation volume is a (mild) negative.

The Russell 2000 ($IWM) is lagging the Nasdaq (see relative performance), but it has managed to return to a new 'buy' signal in On-Balance-Volume that came off the back of an accumulation day. It looks like value traders are ready to take advantage of a break of March swing highs, with a sizable upside zone if it can clear its 200-day MA.

Like the Nasdaq, the S&P is nicely poised to clear handle resistance and move to challenge the February 'bull trap'. Whatever happens over the coming days, support at 5,800 should be strong given proximity of 200-day MA and the March swing high.

While I remain positive on the Nasdaq, we need to keep an eye on breadth metrics. For example, the Nasdaq Summation Index ($NASI) is on a 'sell' signal and is a point where taking profits or going short is favored. Given the tight action, a swing trade off a break of consolidation highs or lows (or an option spread), might offer a better risk:reward.

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Investments are held in a pension fund on a buy-and-hold strategy.

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