Today is May 10, 2006

Our current signal is BUY

This signal was initiated after the close on June 27, 2005

We mentioned last week that there was enormous pressure (from a technical perspective) for the stock market to continue higher and that the indices would be moving higher in the next two days. The stock market did move higher and the recent short-term pullback has put pressure on the indices again.

The first chart is of the NASDAQ Composite. You can see how the index fell into its 50 day moving average today and is sitting on top of the downtrend line that started in the middle of April. You can also see how the uptrend line from March is currently in the 2305-2310 area. The 50% Fibonacci retracement from the March 2006 move is also at 2310. For all of these reasons, we expect the NASDAQ Composite to stay above the 2300 area if the short-term pullback is not already over.

The second chart is of the NASDAQ 100. We have drawn the uptrend line from the February 2003 bottom. The index is still above this uptrend line and has stayed well above the lower support line for weeks. The NASDAQ 100 is running out of time, but this is good news, as it suggests the index will be breaking out very soon.

The third chart is of the S&P 500. The S&P 500 is still above the orange uptrend line (drawn last week) and is also above the new support line (purple). Most likely the S&P 500 will not break below today's low. If it does, support is at 1310.

The final chart is of the Russell 2000, which is still above the uptrend line we have shown for months. This line will also add pressure to the markets, suggesting that a move north will be happening sooner rather than later.

Just like last week, there is enormous pressure on the indices right now (from a technical perspective). We expect the indices to be higher by the end of the week.

Take Care,

Stephen Brown
Founder of Nasdaq Wizard, LLC