Higher prices will prevail!

  • September 16, 2005
  • Tim Truebenbach


 


There are several ways to look at the
market right now, based on the place it stands and how it is currently
trading.  We will get more into
that later, but for now I will simply show you a chart of the NASDAQ and say
that it remains in a confirmed uptrend.

First of all, the market could roll over, fall through support around 2,050 —
2,100 and basically do nothing. 

The market could simply
produce a trading-range environment and trade between 2,100 and 2,200 on the
NASDAQ, 1,200 and 1,250 on the S&P 500 and 10,350 and 10,720 on the Dow

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Lastly, we could see the major averages and specifically the NASDAQ
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break above 2,200 on heavy volume and face very little resistance to 2,800;
which is about a 30% gain.

The latter is what I expect
at this point for a number of reasons.  Without going into everything, the two
primary reasons include strong leadership and the confirmed uptrend that I
began this article with.

Google
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and Amgen
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Semis
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with a solid background from which it can move higher. 

Secondly, the market has
produced a very favorable pattern of buying on above-average volume and
selling on below-average volume since late-April.  This type of action
indicates that institutions are buying stocks and have thus far had a very
consistent appetite to do so.  The market is currently consolidating a very
nice move it produced since this accumulation began and it became obvious that
this was occurring (overbought).  It will take however long to absorb this and
get most investors to look the other way and even bet against any further
upward progress before it can continue.  The best advice I can give is to
watch the action from day to day and look for higher prices to prevail as I
strongly believe will eventually occur based on the action up to this point.

Good Trading and enjoy your
weekend!

Tim