The Nasdaq put forward a very strong move today. Volume accompanied the move, the first time in several months that the index has seen good volume on a move up.
In my previous post here at Trading Goddess's, I suggested an area which the Nasdaq might find support. The index did not yet make it down to those levels. This shows a great deal of strength, though it is certainly possible the Nasdaq may dip from here and visit the 2600-2650 area.
In the chart above, the bottom line represents the uptrend established from the August low. This uptrend was firmly punched through on Friday, October 19th. The upper line is the resistance set from the October high.
This analysis shows the index at a critical moment. The Nasdaq managed to close just slightly above resistance (or right at it, depending on where you draw your line), and closed just below, (or right on) the uptrend line.
A strong showing over the next few days should put the Nasdaq above both lines, and will mean the recent pullback was just another buying opportunity. Failure to overcome the resistance line suggests further retracement is likely.
Basically, if you are short, this is where you stick it to the bulls. If you are long, this is where you ram it to the bears.
The next few days should be very entertaining as both camps fight for dominance.