Yesterday's market action was positive.
The Nasdaq Composite pulled back 0.36% in heavy volume (Point A). With the loss being tame and volume being inflated, it tells me that once again the bulls and bears were fighting it out for control of market direction.
A good clue that a bottom may be close came from the S&P 600. Notice that even though the Nasdaq pulled back for the day, the smallcaps were shooting higher and with volume coming in above average indicated professional accumulation (Point B).
Leading stocks action was positive. A higher number gained in above average volume compared to those that dropped in above average volume. When this happens on a day when the Nasdaq loses ground, it's known as a bullish divergence.
After bullishly reversing off its lows yesterday I would like to see the Nasdaq continuing to power higher and get back above its 200 day moving average. From there the next port of call is the 3000 level (Point C), which currently stands just 0.8% above where it is currently trading.
If on the other hand it does pulldown further its good to know that the Nasdaq has solid support between its 200 day moving average and 2942 (Point D). Another major positive is we can now kiss goodbye to October as the three strongest market months of November, December and January are now upon us.
Please note past performance should not be used as a guide to future performance, which is not guaranteed. Investing in Funds should be considered a long-term investment. The value of the investment can go down as well as up and there is no guarantee that you will get back the amount you originally invested.
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