Today is June 21, 2006

Our current signal is BUY

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

Today was a good confirmation day for last Thursday's rise on higher volume. Generally speaking, you can assume that a rally is underway when you have had two significant advances in higher volume within a few days of each other after a downward correction. This is exactly what has happened. Most likely the bottom of this correction was last Wednesday and today suggests that the powerful move we have been waiting for is beginning.

The first chart is of the NASDAQ Composite. Underneath this chart you can see the NASDAQ up volume divided by the NASDAQ down volume. This indicator surged during the two most recent advances. Rarely is this indicator in the double digits. Usually you would see such a powerful statement toward a market top, but as we are coming off of a downward correction, this indicator suggests a huge rally is coming. We have also pointed out the increase in volume in the two recent up moves.

The second chart is of the S&P 500. Currently, the index is in a downward channel and is also sitting on top of major resistance. A break of this resistance and channel should send the S&P 500 back to the 1290-1300 area.

The Russell 2000 is in a similar situation, but the index is currently sitting below resistance and in the middle of its trend channel. Just like with the S&P 500, a break of the major resistance indicated on the chart (700 area) coupled with a break of the trend channel should push the index to the 740 area.

We have had to wait patiently for the bull market to resume itself, but today's action suggests that the powerful move north we have been waiting for is just beginning.

Take Care,

Stephen Brown
Founder of Nasdaq Wizard, LLC