The S&P 500 initially fell during the trading session on Tuesday but turned around and rallied a bit to form a bit of a hammer. It looks as if we are going to try to reach towards the 2700 level above, an area that has recently been resistance. If we can break above that level, it’s likely that we will continue to go much higher, perhaps reaching towards the 2800 level. Above there, the market should then go towards the highs again. I believe that the 2600 level underneath is a bit of a “floor” that extends down to the 2500 level. This is a market that has seen a lot of volatility as of late, so I think we will continue to see more sideways action, as the market is trying to figure out what to do next, especially after such a dramatic fall.
The NASDAQ 100 initially pulled back during the trading session on Tuesday, breaking down below the 6500 level but bounced to turn things around and form a nice-looking hammer. I believe that the 6600 level above is going to offer a little bit of resistance, but if we can break above there the market will more than likely go towards the 6800-level next, followed by the 7000 handle. The 6500 level looks likely to offer support, and I believe that longer-term the NASDAQ 100 will rally right along with the rest of the US indices but may be a bit of a laggard. I believe that we will not only reach the 7000 handle but go much higher than that over the longer term. If we were to break down below the 6200 level, that would be extraordinarily negative, perhaps reaching down to the 6000 level after that.