NDX Is Range-Bound

The Dynamic Trading System generated a signal to take profits on bullish positions on the Nasdaq 100, or NDX, Wednesday. The System remains out of the S&P 500, or SPX, market.

The GDP data delivered Wednesday (stronger than expected with weaker-than-expected inflation) gave credence to the Federal Reserve's more optimistic outlook for both growth and inflation in its policy statement that afternoon. The Fed did the right thing and, despite a more optimistic assessment on both scores, reiterated its continued concern over tight resource utilization (high capacity utilization and low unemployment) and a tightening bias.

The conditions are canted toward a Goldilocks scenario, and the Fed is vigilant about making sure that quickening inflation doesn't queer the deal. That's about all you can ask for.

While there are a lot of bullish factors now operating in the market, there are a couple of things to be cautious about in the SOX and VIX charts below.

NDX on the Range

The NDX rallied Wednesday on the Fed statement. While a breakdown was averted, no particularly important resistance levels were breached to the upside, and the index rallied within its November-January congestion band.

Watch 1820-1825 to the upside. A penetration up through that level would be significantly bullish.

Source: TheAgileTrader.com

DTS Nasdaq Short-Term Oscillator: This measure of the Nasdaq's short-term internal buy/sell pressure ticked lower Wednesday from a moderately overbought condition, despite the market's strength. This downtick is what generated the System's signal to close long positions.

DTS Nasdaq Mid-Term Oscillator: This midterm measure of the Nasdaq's internal buy/sell pressure remains just about on its zero line, indicating a trendless market environment -- at least to this point.

Nasdaq New High Percent Line: The ratio of new highs to the sum of new highs plus new lows printed a solid 78% Wednesday, with 144 new highs (which ain't bad). But this indicator continues to hover below 80%, which indicates that upside leadership is by no means overwhelming.

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At the time of publication, Oliensis had no positions in any of the stocks mentioned in this column, although positions may change at any time.

Adam Oliensis is president of Dog Dreams Unlimited, a guaranteed introducing futures brokerage, and editor of the trading service The Agile Trader. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Oliensis appreciates your feedback; click here to send him an email.