S&P 500
The S&P 500 fell during the course of the session on Wednesday, testing the 2040 handle. However, we had enough support there to turn things back around to bounce somewhat and form a candle that although it doesn’t look like a hammer, it does suggest roughly the same thing as it has bounced from support. If we can break above the top of the range for the session on Wednesday, it’s likely that the market will grind its way towards the 2100 level. If we can break above the 2100 level, the market should continue to much higher. I don’t have any interest in selling this market, at least not until we break down below the 2000 handle. This is an area that of course will be supportive due to the fact that it is a large, round, psychologically significant number.
NASDAQ 100
The NASDAQ 100 fell significantly during the course of the session on Wednesday as well, but we found support at the 4300 level. I think if we can break above the top of the range during the session on Wednesday, I feel that this market will probably try to grind towards its 4400 level, perhaps even higher than that given enough time. Certainly, if we can pick up the momentum I think we could reach all the way to the recent highs.
Although we have broken down a bit, the reality is that we had a significant rally previous to this pullback, and I think as a result people are starting to think about this area as the potential value that longer-term traders look for. Add to the fact that the US dollar seems to be losing some of its luster, that of course will help the value of stock indices in the United States in general as we should continue to see traders looking for returns in these markets.
