The tech-heavy Nasdaq 100 (NDX) is forming a very bullish two year inverse head and shoulders bottoming pattern. The accompanying annotated graph illustrates all the important events since the financial crisis began in 2007. It is very healthy to see that this index has nearly repaired all the damage of 2008 and is perched just below the neckline of its large base. It is also important to note that April 2010’s highs correspond with the highs in June 2008 which form the neckline of this pattern. Technically, a new buy signal will be triggered if the NDX manages to trade above the neckline (2060) of this very large pattern. Until then, this market is extended and patience is paramount.
Fundamentally, the market is trading higher thanks to the ongoing global recovery, quantitative easing (QE 1 & 2), solid earnings, and a weaker dollar. As long as these factors remain at play, higher prices will likely follow. Trade accordingly.
Sarhan Consulting provides both global macro and equity only consulting services to institutional clients around the world. For years, its clientele has participated in the firm’s objective market-based outlook, which has one primary goal: to provide stable trading ideas across all asset classes.
Sarhan Capital’s consulting arm allows clients to participate in the idea generation process and be privy to many of Sarhan’s best ideas long before they are highlighted in other publications. In addition, clients receive objective feedback on their own ideas and are alerted each time Sarhan Capital traders buy and sell. Many institutional clients including hedge funds, private family offices, brokerages, registered investment advisers, and corporations, have turned to Sarhan Capital for personalized advisory/consulting services in recent years.
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