The NASDAQ Composite has spent the first 6 trading days of August in a tight trading range. A breakout of this range will likely result in an extended move.
Historically, the direction it is likely to pick is up. Over the next 5 weeks, the NASDAQ has averaged a 2.9% gain, with the only losses being from the 1998 Russian stock, bond, and currency crisis, the two post-internet crash years, and the 2008 stock crash.
The Dow has pulled back right to its 200-day moving average and is awaiting instructions. The S&P 500 remains above its 200-day MA, and may find support at 1900.
The Russell 2000, representing smaller cap stocks, has dwelled within a trading range since late 2013. Being near the bottom of the range, a short-term cycle low due, and with Stochastics in the oversold area, a rebound is likely. The Russell's seasonal pattern is similar to the NASDAQ's – the Russell 200 has averaged a 3.1% gain over the next 5 weeks with gains in 19 of the past 23 years.
Unless significantly negative news comes out to throw the market for a loop (meaning a sharp drop), the likely path from here is for a rebound. Like the February and May rebounds, a 10% rise in the major indexes could be in order.
Of course, there's much more you need to know and many more stocks you can capitalize upon each and every day. To find out more, please click on the following link: www.markettamer.com/seasonal
By Gregg Harris, MarketTamer Chief Technical Strategist
Copyright (C) 2014 Stock & Options Training LLC
Unless indicated otherwise, at the time of this writing, the author has no positions in any of the above-mentioned securities.
Gregg Harris is the Chief Technical Strategist at MarketTamer.com with extensive experience in the financial sector.
Gregg started out as an Engineer and brings a rigorous thinking to his financial research. Gregg's passion for finance resulted in the creation of a real-time quote system and his work has been featured nationally in publications, such as the Investment Guide magazine.
As an avid researcher, Gregg concentrates on leveraging what institutional and big money players are doing to move the market and create seasonal trend patterns. Using custom research tools, Gregg identifies stocks that are optimal for stock and options traders to exploit these trends and find the tailwinds that can propel stocks to levels that are hidden to the average trader.
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