Let’s examine the Nasdaq composite in three critical time frames: weekly, daily, and 30 minute.  Starting with the weekly, the Naz still looks bullish. The market-leading index plotted a hammer above major support this week, and RSI is still well above 50. The only reason for pause is the overbought condition of the slow stochastics.

The daily shows a very strong bounce from the 200 day EMA on huge volume – a critical level the SPX has yet to cross.  This is very noteworthy.  After resolving two bear patterns to the downside, the recent move-up has come on extremely convincing volume, and the MACD looks poised for a bull cross.

Zooming-in on the final time frame, we see negative RSI and MACD divergences, pointing to a short- term pullback amidst an otherwise bullish move. 1840 is an important level to watch on this chart.

In summary: the state of the chart is bullish for the intermediate time frame – in my opinion – but the keystone is the gap just overhead on the dailies in the 1900 range (blue field). This is an incredibly significant line-in-the-sand, and will be a difficult level for bulls to overtake. It is very possible that the Naz will either double top or break-out at this level within the next few weeks, and being the market-leader, this will have enormous impact on overall market direction.

Watch the state of the chart and trade accordingly.

Regards and Happy Trading,

@theEquilibrium

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