My New Target for the Nasdaq

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Stocks posted their second consecutive day of gains on Thursday, and the Nasdaq Composite stole the show by setting a new record closing high. It took more than 15 years, but the index finally exceeded its prior peak at 5,048.62, made on March 10, 2010, with a close of 5,056.06.

Several previous attempts at a new high in the Nasdaq failed. The latest run at a record was in March, when the index closed over 5,000, but then pulled back on profit-taking and fear of lower-than-expected Q1 earnings.

West Texas Intermediate (WTI) oil for June delivery settled at $57.74 a barrel, up 2.8% to its highest price since Dec. 12. The advance was due in part to falling stockpiles of gasoline amid higher demand at the pump and a falling U.S. dollar. The euro gained 0.9% against the dollar at 1.0825.

It was reported that Comcast Corporation (NASDAQ:CMCSK) will drop its bid for Time Warner Cable Inc (NYSE:TWC) following resistance from regulators. CMCSK rose 0.6% and TWC fell 0.6%.

Initial jobless claims increased to 295,000. Analysts had expected a decline to 288,000. Continuing claims rose to 2.325 million from 2.275 million.

At Thursday’s close, the Dow Jones Industrial Average gained 20 points at 18,059, the S&P 500 rose 5 points to 2,113, the Nasdaq jumped 21 points at 5,056, and the Russell 2000 was up 6 points at 1,272.

The NYSE’s primary market traded 797 million shares with total volume of 3.6 billion. The Nasdaq crossed 1.8 billion shares. On the Big Board, advancers outpaced decliners by 2.1-to-1, and on the Nasdaq, advancers led by 1.6-to-1.

Nasdaq Chart
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Chart Key

In retrospect we can see a bullish “W” formation on the Nasdaq’s chart from which a new closing high was achieved. This formation is almost always bullish and fairly reliable as to its target.

With support at about 4,800 and resistance at the closing highs of the “W” at about 5,000, we can make a rough calculation that the breakout will probably result in a rally to about 5,200 points — but not all at once. The pattern took almost two months to form and will likely take at least two months to achieve the target.

Conclusion

It was a delight to finally see the Nasdaq achieve a new high, even if the value of the high in 2000 dollars was somewhat more than today’s dollar. But a high is a high and we will celebrate it.

Meanwhile, the Dow Jones Transportation Average has been grinding away with a four-day advance. The serious nature of its close below the 200-day moving average was outlined in the April 14 Daily Market Outlook.

Wednesday’s close at 8,905 was above the index’s 50-day moving average at 8,901, which is an enormous relief for the bulls. Now the transports face the task of overcoming resistance that was constructed over six months.

But six months ago, the Nasdaq was struggling to reverse a nasty sell-off that took it under its 200-day moving average below 4,300. There were few, in fact no analysts (including me), that predicted a new all-time closing high would be achieved in any time frame.

The reversal to a new high in the Nasdaq was not the result of any conspiracy designed to buy at an artificially produced low, but rather it was the powerful American economy that is strong enough to overcome bureaucratic red tape and even terrorists who would do us in. Nothing is impossible in a mega bull market. That’s why my overall investment outlook is still in the bull’s camp.

Today’s Trading Landscape

To see a list of the companies reporting earnings today, click here.

For a list of this week’s economic reports due out, click here.


Article printed from InvestorPlace Media, https://investorplace.com/2015/04/daily-market-outlook-new-target-for-the-nasdaq/.

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