Today, three of the indices we follow fell to the support lines we have mentioned in the previous few commentaries. Last week, the Russell 2000 fell to the support line we indicated and has since bounced back. What does all of this mean? If these indices break these support lines, there will probably be another short-term push to lower levels.

The first chart is of the NASDAQ 100. You can see how the NASDAQ 100 did break the symmetrical triangle formation from last week to the downside. You can also notice how today's low was where our recent support line was drawn. We have shown the most recent downtrend channel with pink lines. A break below the 1675 area should push the index down to the next support line at 1635-1640. A break above the falling trend channel should finally push the NASDAQ 100 to 1750, before a break to new highs.

The second chart is of SMH. SMH also found support at our recent support line. The pink line shows the current descending triangle formation. A break above this line (around the 38 area) should finally push SMH to the 39.00-39.10 resistance area. A break to the downside should bring SMH to the 36.10 area. For this setup to remain bullish, SMH really needs to stay above the 37 area.

The next chart is the Russell 2000. You can see how the index found support at our line last week. You can also see that it is coming very close to the lower uptrend line. We believe that the Russell 2000 will stay above both the lower uptrend line and the support line indicated on the chart.

The final chart is of the NASDAQ Composite. Our support line was a little low for this index. 2300 is the support, not 2295. The best case scenario is for the index to stay above 2300, but a fall to 2280 would be okay. A break of that line would push the index down to the 2240 area.

If the stock market is going to continue its uptrend before another short-term pullback, the indices will have to prove themselves within the next two days. Otherwise, another push lower would be expected.

Take Care,

Stephen Brown
Founder of Nasdaq Wizard, LLC