We welcome several new subscribers this week. This would appear to reflect a growing confidence among the self-directed investor community that the summer bear market is approaching its end. Let's hope this is so!

For their benefit, let me remind everyone that our weekly newsletter usually starts out with a review of the NASDAQ Composite chart as most breakouts come from that market. We typically look at the 6-month daily candlestick chart with a Bollinger Bands overlay for 1 and 2 standard deviations, and the 50 and 200 day simple moving averages.

This week, we are going to vary that scenario slightly by showing the 50 day (red) and 10 day (blue) exponential moving averages. This is because these two moving averages are inputs to our market trend model. When the 10 day ema is above the 50 day ema then our model considers the trend to be up, and when the 10 day ema is below the 50 day ema, the trend is down.


You can see that the sizable upward moves on Thursday and Friday were on light volume so we would like to see stronger volume when the markets open next Tuesday to confirm the trend. However, we can see that if the upward trend continues we are still a couple of sessions away from our trend model turning positive. If so, the index will encounter resistance at 2310 and a break out above that level would confirm a new bullish phase.

The number of breakouts jumped to double the 13 week average this week with an average gain after breakout that beat the market averages. If volume had been closer to the 50 day average on Thursday and Friday there would have been many more.

No new features this week.

This feature wil return next week.