Last week was extremely positive for us. We have believed that we were always in a bull market during this recent decline and last week confirmed the strength off of the July bottom suggesting that a strong uptrend has definitely started.

None of the recent bottoms in the stock market triggered a buy signal in our system. We believed that this was the case as we thought that the long-term trend was still up. If this was only a correction in a bull market, the market would not have enough downside momentum for our system to trigger a buy. As of last week, we know for sure that we are still in a bull market, that the long-term trend is up, and that our system was right to not trigger a sell in May. We know this as our backup system, designed to trigger buy and sell signals when we miss tops and bottoms, triggered a long-term buy signal at the end of last week. This tell us that the correction is definitely over and that the long-term trend is definitely up.

Tonight we are going to look at the NASDAQ Composite, QQQQ, the S&P 500, and the Russell 2000 and predict how high the market will go with this signal.

The first chart is of the NASDAQ Composite. Generally speaking, we can assume that the index will move at least 15% in this new leg higher. This will put the index near 2006 highs. We believe the index will hit this level at a minimum. We also believe that QQQQ will at least hit the 43 area before our system triggers a sell signal. For weeks in the past we mentioned that we believed that the S&P 500 would hit the 1380-1400 area. We still believe this. This looks like a very possible stopping point for the index. The Russell 2000 hit our old target of 780 before the recent decline. We expect the index to move back to 2006 highs at a minumum as well. In theory, the market should break above 2006 highs before we could trigger a sell signal. Therefore, it is most likely that the NASDAQ Composite will break above the 2375 area this buy signal.

As we mentioned last week, healthy markets move in steps. Therefore, any recent weakness or any decline in the coming few weeks is expected and should not be looked at as damaging the very bullish scenario we have laid out above.