The internals are pointing higher for the Nasdaq. The Advancing minus Declining volume continues to make a new highs along with the Nasdaq. The NAUD is actually leading the Nasdaq Composite higher.
The Nasdaq Composite Bullish Percent Index (BPCOMPQ) has not been this high since the market started a long bull market in 2003. At the minimum, this means a lot of stocks are moving up.
But while the internals show plenty of buying in the Nasdaq, the McClellan Oscillator remains oversold from the recent consolidation. The 21 day moving averages shows three higher lows and higher highs which is bullish.
Charts courtesy of Stockcharts.com
So is the market ready to blast off into another multi-year bull market? I do not believe so. And what am I guessing?
The Nasdaq has been tracking the Dow Jones Industrial Average crash from 1929-1938. That market ran into the fall of 1938 and then dropped into 1942. I have no idea if there will be a bear market into 2013 but I am guessing we get at least a year or two of weakness.
The 1×1 angle off the 2000 high has been strong resistance. My guess is the angle will stop any additional upside in this market. That is 25% from here. Although, price momentum could run out of gas before exactly hitting the angle. So I don’t plan to play it too cute on the upside.
The Dow dropped about 40% from 1938-1942. A move of that magnitude from the yellow region on the SPX chart above would bring price back down to the 1×4 angle and test the March low.
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Tags: DJIA-Dow Crash 1929-1942 · Market Internals · Market Outlook · McClellan Index · Nasdaq Charts (IXIC)No Comments
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