Thursday’s dramatic acceleration, coupled with a “key reversal day” on both the S&P 500 (SPX) and the Nasdaq (NASD) on Monday, leads me to a bullish outlook.

Chartwise what we have on Nasdaq is a new two-point support line with the July 8 low connecting with Monday’s key reversal day intraday low of 2,024.

Nasdaq’s internal indicators have suddenly reversed, issuing a buy signal from its slow stochastic, while its Relative Strength Index (RSI) is now rising after hitting 37.56 last week — the lowest reading for RSI since the bottom in March.

In brief then, the charts are bullish for both indices. And the sentiment readings are bullish, as well, with the American Association of Individual Investors (AAII) sentiment survey this week at 22.22% bullish and 55.56% bearish. This is the most bearish reading since Feb. 19, just before the March bottom, and insider selling has fallen sharply in the last week, according to Investors Intelligence.

Conclusion: The bull is alive and well and, barring a sharp closing low under the intermediate support lines of the key indices, could reach the intermediate target of S&P 1,120 and, perhaps, even Nasdaq’s goal of 2,300 before year-end.

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