NASDAQ-100-Check

At the beginning of October 2011 we prognosticated new highs in the NASDAQ-100 to come up within 2-4 months. After the year-end rally we expected then (10/09/2011), the index of the 100 largest, most actively traded US Companies listed on the Nasdaq stock exchange – being dominated by technology – has the fulfillment of the second part of our forecasts ahead now: New Highs!

The very positive performance of the first trading week in the new year has pushed the market to a most important price mark: 2370. Its overcoming would be likely to lead to new highs:

The actual weekly 6 Candle GUNNER24 Up Setup makes visible that the resistance of the 4th double arc existing since August 2011 seems to be overcome. For the first time the index closed clearly above the 4th double arc. In addition last week’s candle is showing some very positive characteristics: Opening narrowly above the upper line of the 4th and just a little dip into the 4th indicate that the 4th double arc changed its physical state from a resistance to a support function in the medium term.

Furthermore the market closes above the very important 1*1 Gann Angle. That one is separating the setup into a bearish and a bullish half. With the closing price narrowly above the 1*1 the index is in the bullish half again. Long entries are to be preferred now. The closing price above the 1*1 is not very significant. The 1*1 Gann Angle won’t be broken before a closing price of more than 2370 points. If such a thing happens next week we’ll go long with a weekly target of 2530. We expect that target to be reached at the end of February/beginning of March.

Afterwards we reckon with a cracking decline. From that span on a monstrous reversal will threaten:

The risk of a weekly broadening top continues being there… It might lead to a 3-6 month decline.

Besides GOOG (rolling again on monthly basis…) and AMZN (turns on weekly base and extremely oversold on weekly basis) the traction engine for the new highs is AAPL of course.

At last, here we analyze for you AAPL on monthly basis by the end of July 2011:

…promising that a July close of more than 390 will lead to the major target at 492$! Well, the July closing price was at 390.48$ - narrowly above it, but that’s how Gann trading is. Frequently things depend on a penny, the market participant crowds use to make their decisions subconsciously whether the respective mark is broken or rejected. Those subconscious decisions result in consequences for the future that are often inescapable then.

After a brief monthly consolidation above the 2nd double arc the expectation of further phenomenal earnings by the end of January drives the AAPL more and more upwards now:

The consolidation above the 2nd double arc is further evidence that the 3rd double arc will have to be headed for. In addition, after an extended test in November and December the rally Gann Angle keeps on driving the stock upwards within the long-term Gann Angle resistance. We may blindly go on buying the daily and the weekly retracements below the monthly rally Gann Angle. A monthly close above 436$ (next important horizontal monthly resistance) will be a further confirmation for the major target. After a major target is reached, often a change in trend will happen…!!!

Well, as usually the technology draft horses in the NASDAQ-100 are the carriers for new highs. So, into which heights is the index expected to rise?

Here’s the long-term monthly 3 Candle GUNNER24 Up:

Starting from the very first impulse which stretched from the November low of 2008 until the January high of 2009 we see that its maximum extension (being the end of the entire setup in terms of price) at 2392 index points was reached at the beginning of 2011. Since February 2011 the index tried as many as seven times to break the natural strong monthly resistance that is the end of the setup in terms of price. Now it has its eighths go to finally overcome the 2392. The success is questionable because of the strong resistance. Even another closing price above the 2392 – as in April 2011 (2404) – wouldn’t be a solid proof for a lasting breakout of the consolidation area at the highs.

So let’s look for some further indications/hints/marks that speak for a sustained break out of the monthly resistance area… We know one mark out of the weekly 6 Candle GUNNER24 Up above – a weekly close of more than 2370 – which gives us the first clue that new highs are on the agenda. So, in case of a weekly close above 2370 we may contract the first tranche long.