Today, most of the indices ran into major resistance and not surprisingly, pulled back from their intraday highs. Most of the indices fell to strong support and it is quite possible that the pullback is over. Tonight we will discuss four charts: the NASDAQ 100, NASDAQ Composite, S&P 500, and the Semiconductor ETF, SMH.

The first chart of the NASDAQ 100 is the same chart from last week's commentary. You can see how the NASDAQ 100 did push to the major resistance we indicated and pulled back to the breakout point of its ascending triangle formation this afternoon. You can also notice how volatility, as measured by Bollinger Band Width, has started to pick up. We believe it is likely that the NASDAQ 100 will find support at the top of the ascending triangle, the 1700 area. Even if the NASDAQ 100 does break below this level, soon we believe the index will break above today's resistance at 1725 and completely invalidate the possibility of a head and shoulder formation.

The second chart is of the NASDAQ Composite. You can see how the index did break above its rectangle formation to the upside last week. Today's pullback would be expected and we believe the NASDAQ will find support at the 2325 level.

The S&P 500 also ran into strong resistance today at 1310. After breaking above the 1295 area, the S&P 500 has consolidated for three weeks now. We believe the S&P will break out of this rectangle formation to the upside, just like the NASDAQ Composite has already done. A break of 1310 should resume the uptrend.

The final chart is of SMH, the Semiconductor ETF. The ETF has run into resistance the last few days as it is crawling back from its downward breakout from the recent head and shoulder formation. A strong close above 37 should bring the ETF to the 39 area.

Even though we do not trade the S&P 500 or NASDAQ Composite with our mid-term system, their charts can provide clues to the future direction of the stock market. That is why we talk about different indices we do not trade from time to time.

Even if these indices talked about today do not find immediate support at the levels mentioned, we will still believe that the mid-term trend is up. The advantage of the indices finding support at these levels is that the mid-term uptrend will continue much sooner than if these key levels are broken.

Take Care,

Stephen Brown
Founder of Nasdaq Wizard, LLC