Due to the recent consolidation and sideways movement in the NASDAQ Composite, we feel that the stock market will continue higher for the weeks and months ahead. This sideways action has relieved some of the overbought condition in the index and will therefore allow for future gains during this buy signal.

The first chart below is of the Russell 2000. You can see how the index has successfully bounced off of its 50 day moving average and the horizontal support in the 780 area. A break of the resistance line shown will invalidate any possibility of a head and shoulder formation being carved. The lower indicator shows the Bollinger Band Width and you can see how extremely low volatility is right now in this index.  This suggests that a powerful move is about to begin, and we feel that the move will be to the upside.

The second chart is of the S&P 500. You can notice how the index is between the past resistance area of 1400 and the coming resistance in the 1480 area.

The final chart is of the NASDAQ Composite. You can see how the index has been in a rectangle formation the last several weeks. Recently, the index has found support on the lower end of the rectangle and has started its bounce higher. A break of the 2470 area will signal the beginning of the new leg higher.

Happy Holidays from the Nasdaq Wizard Staff!