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Thursday, December 1, 2011

The Nasdaq Struggles

So far, it appears that the zone above 1250, which has been resistance several times before, is putting up som again, but the momentum is still to the upside. A couple of weeks ago, I thought that the breakdown from the triangle pattern would reverse, and although it did, a true reversal would take it back into the traingle. Unfortunately that traingle is no longer valid, as we are now well beyond the right most point. What that means I have no idea, but I am no longer aiming at a 1350 target. At this point I still think we will head up, for seasonal reasons, but that is not a given. All but one of my positions are now in the green, and I am taking profits on any strength.
One reason for my lack of confidence is the action, or lack of it, in leading stocks, many of which are located on the Nasdaq 100. Most look pretty toppy, and another one (LULU) bit the dust today. This has come a long way in a few days, but a failure to get above the resistance level I have here, which is still quite a ways off, will be quite bearish.
One ray of sunshine,and a reason I didn't bail out totally today, is the renewed strength of the Russell 2000, which is getting near a possible breakout. If it does, Santa Claus will bring us a rally for Christmas.

The percentage of stocks on the NYSE above the 50dma is firmly in bull territory, and today's little pullback spared us from overbought territory for a day or two, meaning this can rally some more. I missed posting the charts last Thursday, and you can see we dipped into bear territory and quickly reversed, which is typical of bullish conditions in the market. i don;t know why it works that way, but it does, and getting back above the 35 level was a good buy signal.

The Nasdaq is less firmly in bullish ground, and could dip back below 50 on a pullback. The Nasdaq is seriously under performing of late, and that is not a teribly bullish sign. Historically, when the NYSE composite outperforms the Nasdaq composite, a correction is not far behind.

I will have the new highs update shortly.

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