Cleveland is a place where the weather can be really wild in the spring. After 2 inches of snow just 10 days ago it will be 90 degrees tomorrow. Literally 5 seconds from Spring into Summer. This is a great metaphor for the stock market as well lately. Broadly moving sideways for a year or more, the narrow range since has driven emotions to extremes at both ends many times.
The chart below shows a popular view. A Head and Shoulders Top. And as recently as the end of April the Nasdaq looked like it was on a path towards the Neckline. Bearish traders were whetting their chops. And they may still prevail. But the weather changed. Finding support at 104, the Nasdaq ETF (NASDAQ:QQQ) consolidated and Tuesday broke to the upside.
Now the QQQ is less than 3 points from a higher high and confirming an uptrend and wiping out that Head and Shoulders. There are many supporting indicators as well. First and most important, the price is back over the 200 day SMA and breaking the range to the upside. The 50 day SMA has crossed up through the 200 day in a Golden Cross as well.
Momentum is also supportive. The RSI is rising and almost into the bullish zone. The MACD is crossed up, a bullish signal also. And how far will it go? The Measured Move gives a target above to 120.40. Maybe it will finally be time for the QQQ to break its all-time high of 120.50.
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