Thoughts on tomorrow's trade

We had bullish action today from both the Nasdaq and the S&P.  The S&P filled their Globex gap from August 8th and the Nasdaq succeeded in closing above their 150 day smooth moving average (2179.77).

The S&P is still a good distance away from their 150 day SMA so they are by no means out of the bear camp and into the bull camp.  So for leadership I go to the Nasdaq.

I think that the Nasdaq now is caught between a rock and a hard place.   They closed above their 150 day SMA but could not get in positive territory on the year (2216.00). The fact they closed above their 150 day SMA was bullish action but the next hurdle is to get back in positive territory for the year (2216.00).  I think we could see a choppy trade between those two prices until the market makes up its mind.

I think that the S&P, Dow Industrials, and Transports are going to sit tight and watch the Nasdaq for leadership.  The Nasdaq is by far the strongest market so if they continue to rally then the rest of the markets will probably follow suit.  The flip side is; if the Nasdaq fails to hold above their 150 day SMA then I think that we will see the rest of the market dip back down.

We also have a bunch of numbers coming out tomorrow and Thursday.  Anyone of those numbers could be the deciding factor on our direction.  Either way I will be watching the Nasdaq for leadership.

Have a great night.

Moving Averages; Black (10 day), Blue (20 day), Green (50 day), Pink (200 day), Purple (150 day smooth avg.). Horizontal Lines; Blue (High of the year), Red (Low of the year), Green (Unchanged for the year).

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