The NASDAQ Composite is struggling to hold above the 2600 level. While it broke out above that level at the end of last week and stayed above it for the earlier part of this week, it found resistance at that level on Thursday but then overcame it on Friday. Where we go from here is very much dependent on what happens in Europe where there are daily mood swings as leaders seem unable to get their act together. Meetings between France and Germany this weekend are a precursor to a summit next Wednesday which was postponed from this weekend. The markets have risen in the hopes of a resolution but this could well be a case of 'buy the rumor sell the news' as the difficulty of getting 17 sovereign countries to agree on a common financial solution is likely to produce a camel rather than a horse.


Volume rose each day this week providing three distribution days and two accumulation days. Those who are short the market are nervous and Friday was likely the result of a short squeeze a.k.a a bear market rally as the shorts hedged their positions before the weekend meetings.

The number of confirmed breakouts jumped to 17 this week but gains were mostly modest. I recommend caution until the outcome of the European summit is known.

No new features this week.

This feature will return in two weeks.  We are still working on our trend reversal system for individual stocks and next week will be traveling so the newsletter will be briefer.