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June 14, 2005
SPX and COMPQ
The pattern at work in the Nasdaq is clearly bullish. After a big advance (Aug-Dec), the index retraced 62% with a correction to around 1900. The correction formed a falling price channel and the May breakout signals a continuation of the Aug-Dec advance. A support zone has been established around 1950-2020 and it would take a move below this are to negate the breakout.
The battle of 1200 is raging. The S&P 500 retraced 62% of the Oct-Dec advance with a falling price channel. Despite the trendline break and support break at 1165, the index quickly recovered and the subsequent breakout at 1180 should be considered bullish until proven otherwise. The index has been consolidating the last four weeks. This should not be taken as a sign of weakness as long as support at 1190 holds.
Posted by Arthur B. Hill at June 14, 2005 07:52 AM