Nice Consolidation
The NASDAQ formed a nice upside consolidation today, after forming a higher low from the Opening retracement. Now, we want to watch 2,300 carefully.

From yesterday's commentary,"...In the short term, we are overextended and likely to retrace. Watch for a break of 2,255 at the Open, and expect a retracement to carry us back to 2,200. Then, if we get that, expect a reversal around that number and a renewed upward push. If the market goes straight up, don't buy right away. It has high odds of retracing during the day. Wait for the retracement..."
Voila. Nice gap, followed by a retracement from the high back to 2,230 and an advance from there. It was just about as perfect an upside consolidation pattern formation as you could ask for. Now, we are just through 2,300 and watching to see if it fulfills its promise. Since 2,300 is an important resistance level, we are going to establish that as our fulcrum - which means we want to go Long above (medium term) and Short below (short term).

Short Term NASDAQ

In the short term, we should be good for another 50 points after today's end of day action, and the penetration of 2,300. However, if we pull back you want to watch 2,290 carefully. That is the lower boundary of a tight consolidation in the 1 Minute Chart. Any push through that level should be shorted for the likely 25 to 50 point move down.

Medium Term NASDAQ

Nice higher low formation today. I wish we had pushed more through 2,300 to"cinch" the rally, but we look pretty good as of today's close. For the medium term, we are Long through the trendline at 2,200 (see 60 Minute Chart) and holding our stop at the line around the same value (2,200). That's 100 points of NASDAQ risk, but likely to be well-worth it. I don't think we are going for the moon here, but I do think the index has some nice, short term upside potential, possibly to the 3,000 zone. For now, we want to be long and keep moving our stops up as the market tells us it is safe to do so.

Summary:

We formed our higher low today at about 2,230, and went Long there after breaking an important line at 2,200. Now, we want to see the consolidaiton in the 15 Minute Chart culminate in a move to something like 2,400 - the approximate target calculated from the center at 2,275 (from a 2,150 low). Since we broke such a strong line in the 60 Minute Chart, we have great odds of a nice little rally here. And, it could develop into"The Bottom." For now, we are cautiously optimistic, going Long, with reasonably tight stops.

Thanks for listening, and good luck in your trading!


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