Fellow Black Box traders... I generally would never post a paid for newsletter as that would be kind of uncool to the service. However, since this is a noteworthy analyst and he's calling this bottoming action... Here are the high points.
John Murphy 3:45 EST today.
BIG BOARD INDEXES MAY BE READY TO RESUME UPTRENDS -- NASDAQ MAY HAVE BOTTOMED WITH HELP FROM SOX AND INTEL -- BIOTECH AND REGIONAL BANK ETFS REACH NEW HIGHS
SMALL CAP LEADERSHIP... After consolidating throughout the month of February, it now looks like several of the major stock indexes are getting ready to resume their uptrends. And that rally is being led by smaller stocks. Chart 1 shows the S&P Small Cap Index having already broken out to a new recovery high (as did the S&P 500 MidCap Index). Chart 2 shows the Russell 2000 Small Cap Index having broken the resistance line in what looks like a "symmetrical triangle" which is usually a bullish pattern. Chart 3 shows the S&P 500 which has taken on the shape of an "ascending triangle" which is also bullish. [A symmetrical triangle shows two converging trendlines -- one rising and one falling. In an ascending triangle, the upper line is flat]. This suggests to me that new highs are also likely in the Dow and the NYSE Indexes. The Nasdaq may not reach a new high, but appears to have bottomed for now. That should give a short-term boost to the entire market. .
NASDAQ HAS BOTTOMED... The Nasdaq has been the weakest of the major stock averages. Even that technology-dominated index appears to be bottoming. First, the Nasdaq correction bounced off its December high (not shown here) at 2000. Short-term indicators like the RSI and MACD lines appear on the verge of turning higher. The 14-day RSI line is about to cross the 50 level. The daily MACD lines are the closest to turning positive in six weeks. I suspect the Nasdaq will exceed its 50-day average and its six-week down trendline in short order. The Nasdaq is getting some help from the biotech and semiconductor groups.
SOX MAY BE TURNING UP -- INTEL NEEDS TO CLEAR 30... New buying in the Semiconductor (SOX) Index is helping support the Nasdaq bounce. This week's SOX bounce off the 500 level has set up a short-term pattern of "higher lows" over the last two weeks and suggests that it's ready to attempt a rebound. A close over its (dashed) 20-day line would signal a rally to the upper Bollinger Band near 530. While several chip stocks have been bouncing of late, all eye's today are on Intel the group's big bellwether. Intel's mid-quarter update is due after tonight's close. Chart 6 shows Intel having recently broken chart support at the December low near 30. That now represents a key chart point. In order to negate that bearish signal, Intel needs a decisive close back over the 30 level. If it's able to do that, it will undoubtedly give a boost to the SOX Index and the Nasdaq -- and the rest of the market.
One more paragraph on the strong Biotechs that I left off.
Happy reading.
AI
