What to make of those new highs?

Markets pushed higher last week and many market indices reached new highs. Our LT wave chart for September indicated strength around the 16th, so yesterday may have been the high for the month. Where do we go from here?

Let’s have a look at the Nasdaq chart (click for larger image):

We have another week of lunar red period to go, and the current technical setup also points to an imminent correction.
The Earl indicator has topped out, leaving a bearish divergence on the chart. And the MoM indicator is stalling near +6.5, well into the optimistic zone.
But the slower Earl2 has made a bottom already, so we may get a rather shallow correction once again. A drop to 3650 might be all we get.
If the Nasdaq falls below 3570, then it would become more interesting for those who are bearish on the market. Such a drop remains possible, but it is no longer my preferred scenario given how easily the market has come back from the correction that started in August.
If we do not see a significant drop between now and mid October, then I think the next major correction will be pushed out into 2014.

Good luck,
Danny