|Source: Chris Schumacher|
The Nasdaq 100 finally pushed outside of the long-standing shoulder formation Thursday to touch 1720. As I would have expected, the index pulled back without breaking above it. There are a few things that need to happen over the next several days in order to remain bullish on an intraday basis. It's possible that end-of-quarter dynamics are responsible for the upside. If this is true, the bears will basically pound the bulls back to1670 support next week. Should the bulls be able to maintain a base at higher levels into the middle of April, then the bulls have a real shot to create momentum that can take the index back to former highs near 1760. We already have a two-day base formation above 1700, as you can see on the chart below. If the 1700 level can continue to act as a support, it would confirm that the bearish shoulder formation has indeed failed and the bears should begin to take off some of their short positions, allowing for a break of 1720 that should push the index to the next resistance area around 1735. For the next three days, I'll watch how the bulls react to the higher levels the index is at. If they can hold the index above 1700 on a closing basis, I'll look for 1735. Should the index fall back to 1670, I'll sit back in my chair and ride out another wave of congestion that favors the range traders.