Our current position is that the stock market indices are beginning another leg up, most likely the final leg before an upcoming sell signal. Our 401k allocation hit a high for this signal today with a gain of 17.77%. This is due to the Russell 2000 and the International Index which both have gains over 20% as of today. There are four charts below: the S&P 500, Russell 2000, NASDAQ 100, and NASDAQ Composite.
You can see from the first chart below how the S&P 500 came into contact with our uptrend line both yesterday and today. Today, the index bounced off of this line and closed at resistance. We believe that the S&P 500 will break out of its current channel to the upside, push to the 1310 horizontal resistance, and start its last upmove for this signal. This trend channel could be looked at as a flag formation, which usually has very powerful bullish implications.
The second chart is of the Russell 2000. Our initial target of 770-780 is only 1-2% from here. At this point, we see the index going quite a big higher from here, possible to the higher uptrend line drawn in the chart.
The NASDAQ 100 closed at strong resistance today. The head and shoulder formation we have looked at for weeks now could be invalidated with another close to the upside. Currently, the index sits at the top of the right shoulder. A break above 1725 will end any possibility that the index intends to follow through to the downside on its head and shoulder formation.
The last chart is of the NASDAQ Composite. You can see the powerful upside breakout today. The index broke out of its rectangular formation on heavy volume. We believe this is the first of many days to the upside. Even though it is likely that this is the final leg before a long-term sell signal, we feel there are plenty of gains ahead before this happens.
