Tonight we will be talking about three of the charts we have shown in previous commentaries: the S&P 500, NASDAQ Composite, and NASDAQ 100. The market indices continue to lose volatility and are most likely consolidating before the next move higher.

The first chart of the S&P 500 shows how the index has been able to stay above the uptrend line drawn from October of 2005 and the support line from the mid-March breakout. There is no time element involved with the horizontal support line (just the need for the index to stay above it), but the uptrend line suggests that the S&P 500's next upmove should begin by the end of next week at the latest.

The second chart is of the NASDAQ Composite. The NASDAQ has continued to stay in its rectangular formation and as the index has stayed above the two support lines drawn in the middle of the rectangle, the next move is likely to be an upside breakout. You can see how low volatility has become by looking at the Bollinger Band Width indicator below the chart. This suggests that it is only a matter of time before volatility increases and a subsequent market rise occurs.

The last chart is of the NASDAQ 100. You can see how volatility is presently very low in this index as well. The NASDAQ 100 still has a visible head and shoulder formation, but the recent movements have suggested that the formation may not end up being valid. An ascending triangle has formed in the last few weeks and an upside break of this triangle should put the index up to 2006 highs and therefore invalidate the formation.

Volatility remains low and it is hard to know when volatility will begin to increase, but the charts we follow are looking more and more healthy, suggesting that the next strong move will be higher.

Take Care,

Stephen Brown
Founder of Nasdaq Wizard, LLC