Markets powered higher last week, which means we have seen a strong lunar Green Period.
But another Red Period is looming and the market is coming close to bumping into a major ceiling.
Here is the current chart for Nasdaq (click for larger image):
We could still touch 3100, but major resistance is likely to form at that level.
I wouldn’t bet on it, since my Earl indicator is already turning lower.
Better to get (or stay) out , and then wait for a bottom in Earl to start looking for taking new long positions.
Major support is around 2900 for the upcoming weeks.
***
Our chart of the week takes a look at the Shanghai stock market (click for larger image):
This market has been in a gradual downtrend for years. But the picture seems to be improving.
Earl indicator is forming a buy signal, while the slower Earl2 is also off its lows, creating a bullish divergence with prices.
This is a weekly chart, so it could take a couple more weeks until a good move starts, but any move above 2250 would indicate a probable rally to 2600 (where resistance from the long term channel would be met).
Can be bought near current levels, with a stop-loss just below 2000.
Good luck, Danny
LunaticTrader Blog 