2 Bullish Signals for the Nasdaq

Following Tuesday's big breakout, stocks closed mixed after some initial
profit-taking. European difficulties dominated the early trading as concerns
over the liquidity of eurozone banks and the recent hike in Spain's bond rates
reminded traders that problems there still exist. But U.S. factory orders rose
for the first time in three months, and steady buying brought prices back to
above breakout levels. At the close, the Dow Jones Industrial Average was up 21
points to 12,418, the S&P 500 rose slightly to 1,277, and the Nasdaq fell
fractionally to 2,648. The NYSE traded 758 million shares, and the Nasdaq
crossed 436 million. On the Big Board, advancers versus decliners were even, but
on the Nasdaq decliners were ahead by 1.5-to-1. Click to Enlarge In Tuesday's
Daily Market Outlook , I noted that the S&P 500 had yet to break decisively
through its 200-day moving average and that the stochastic was
"non-confirming" in that its highs were lower than prior highs. But these
concerns were satisfied by the S&P 500's clean break from its 200-day moving
average and an improving stochastic, which is now almost flat. The index still
must exceed its October high at 1,293 in order to clinch the turn up, but it is
clear that the bulls are now in charge. Click to Enlarge Although the Nasdaq has
yet to follow the positive course of the Dow indices and the S&P 500, it has
made several very positive steps in that direction. First, and most importantly,
it not only broke through its 50-day moving average, but did it with the gusto
of an opening gap, which, on Tuesday, even popped through the 200-day moving
average on an intraday thrust.