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S&P Hits All-time High; Nasdaq Nearly Breaks Out; MACD Buy Signal Generates

David Becker
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S&P Hits All-time High; Nasdaq Nearly Breaks Out; MACD Buy Signal Generates

With the S&P500 hit new highs on Thursday, the third consecutive record in a row. The SPX has traded in a 2.1% or 40-point range through earnings season so far. The horizontal support from the May lows now connects with the 3 year channel trend line at 1850. The market had a few oscillations before finally breaking through 1900. It would appear we are having the same price action as we approach 2000.

We have now created a 3-year channel the S&P500 that encompasses the vast majority of the price action since the 2011 lows. Some technicians may show it as a narrowing wedge but the widest part was way back in 2012 and all of the previous wedge shapes have failed to respond. At this point, the channel trend is intact and the large cap index appears to be riding the upper trend line higher.

The Nasdaq Composite accelerated out of the gate Thursday to test the highs of July 3, 2014. With stellar earnings from Facebook(NASDAQ:FB) and strong reports from Apple (NASDAQ:AAPL) and Intel (NASDAQ:INTC) over the last week, the Nasdaq has pushed back up to the previous highs of early July. The Nasdaq ended up closing slightly lower than yesterday which is a bit of a surprise with the strong push from Facebook.

At the current level, the Nasdaq Composite is still at the third highest monthly close since the “.com” top in March 2000. The Nasdaq is up 130 points from last week’s low and only has 211 points to take out the all-time monthly closing high through the next week if it is to happen in July. Momentum on the Nasdaq has turned positive as the MACD (moving average convergence divergence) index has generated a buy signal. This occurs when the spread (the 12-day moving average minus the 26-day moving average) crosses above the 9-day moving average of the spread.

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