(By Rich Bieglmeier) The event that we've been waiting for happened on Monday. The NASDAQ finally joined the Dow and S&P at cycle highs starting from June first's bottom. That's called confirmation.
While it is no guarantee that stocks are going higher, it does bode well for bulls going forward. History shows that when all the major indexes hit highs together, it is a reliable sign that more gains are to be had. At the very minimum, minus some goofball event, the odds of a full blown correction are low at the moment.
The NASDAQ did get turned back at 3,000 during the day. Round numbers tend to be more of psychological numbers than actual resistance. Sort of the same reason a store will charge $4.99 versus $5. It's no different, just makes you feel better.
However, we don't expect 3k to stand in the way for too long. Once the index waves bye-bye, iStock expects the NASDAQ to find its way to 3,050. That's where real resistance can be found.
A lack of volume is the only negative we see on the day, but it's probably more or less nitpicking. As we wrote about in this week's i On the Market, for the right angle triangle breakout to be "official" it does require an assist from a surge in volume.
Investors still need to be cautious as the underlying economic fundamentals are still weak, revenues are down for S&P 500 companies that have reported Q2 earnings, Europe is still as messy as my kids room, and the fiscal cliff is coming into view.
It's our view, the current run is technically, and momentum driven, unless Wall Street actually believes the economy is simply in a soft patch and will pick up steam later in the third or fourth quarter. In the meantime, investors need to trade the trend that's in place, and today, the NASDAQ made it three-for-three indexes making current cycle highs.
Without any major economic news on tap Tuesday, there is nothing standing in the way of continued momentum on Tuesday, except for some Euro drama. In the words of Poky Pig, that's all folks.