The US stock markets continue to show a “buy on the dips” mentality, and I believe that the Dow Jones 30 and the NASDAQ 100 are showing that. In a twist, it appears that the NASDAQ 100 is going to take the lead, which is something that it had not done for some time.
Dow Jones 30
The Dow Jones 30 initially tried to rally during the Friday session, but as you can see we pulled back a little bit to try to find buyers. I think eventually the buyers will return, and I think that we will go to the 26,150 level. There is a significant amount of bullish pressure underneath, and therefore I think it is much easier to buy this market than to sell it. In fact, I have no scenario in which a willing to sell the market right now, as corporate earnings continue to do quite well. A shrinking US dollar of course helps exports, as goes the typical correlation.
NASDAQ 100
The NASDAQ 100 initially tried to rally during the Friday session but then turned around to pull back as we reached a fresh, new high. The 6850 level is a bit resistive, and a pullback at that point looked reaching towards the uptrend line, an area that seems to be very supportive. Looking at the up trending line, it forms an ascending triangle, and that tells me that the market is trying to rally. Beyond that, the hourly chart is crossing over just above the oversold condition, so I think we will eventually break out and go looking towards the 6900 level. I recognize that these pullbacks offer value, just as the algorithmic traders have programmed their robots to deal with this market.
MORE WILL UPDATE SOON!!
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