The Nasdaq 100 (NDX) shows a lot of strength in this move off the March low. Price has moved between eigth times and four times the slope of the 2002-2007 bull market. The initial move up in 2002 was strong but did not last the duration of the current move. The strength of the ongoing market action is not a predictor of a long term bull market, but it does show the move from March has serious buyers.
The bounce originating in November was weak and showed no conviction of buyers. The slope of the beginning this action was about equal to the slope of the total bear market. The first leg of a strong move will always begin with 8 or 16 times the slope of the previous move. The test of the November low set up a strong double bottom pattern which propelled the thrust off the March low.
The drop from June 2008 to November 2009 was very steep. While the current thrust is not quite at that angle today, it is amazing that the first 60 days matched the nasty bear market finale.
The two bar swing chart continues to show price in a very strong position. The two bar swing requires a confirmation bar to change the swing direction. The market has worked of a significant overbought condition in the past few weeks while continuing to add to price gains. I think the 63% gains off the low (which occurred on the Dow in 1938) is well within the realm of possibility.
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Tags: Double Bottom · Market Outlook · Nasdaq Charts (IXIC)No Comments
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