The NASDAQ Composite continued its ascending triangle pattern and is closing in on its 2007 high set on October 31, 2007. In fact, the index needs just another 37.8 points (1.3%) before it reaches that level.

Coincidentally, the 2861 resistance level coincides with the ascending triangle upper bound so we can expect 2861.5 to be a major resistance level. It may take two or more attempts to break through that level but a breakout on strong volume would be a strong bullish signal.

Equally, failure to breach the 2861 level and a pullback on higher volume would signal the start of a correction.

The third possibility, and the most likely in my view, is that the NASDAQ (and other indexes too) will enter a trading range which will ultimately resolve to the upside.

These points on a chart where the slope changes direction are called "Inflection points". I'm betting that we are approaching a special case of an inflection point, called a saddle point.

The markets are closed on Monday for the President's Day holiday. Enjoy your long weekend!

There are no new features this week.

Ritholz Trading Rules

One of our favorite blogs is Barry Ritholz's "The Big Picture".

Earlier this week he published a list of recommended rule sets to read. You may enjoy them over the weekend.

• Livermores Seven Trading Lessons

• Bob Farrell’s 10 Rules for Investing

• John Murphy’s Ten Laws of Technical Trading

• Rules for Shorting

• Art Huprich’s Market Truisms and Axioms

• DENNIS GARTMAN’S NOT-SO-SIMPLE RULES OF TRADING

• Lessons from Merrill Lynch

• Rosie’s Rules to Remember

• The Zen of Trading

One of the delights in reading "The Big Picture" are the generally well informed (and often amusing) comments from contributors. You can see the entire post containing this list here.