Other major market indices that also closed at a new all time closing high were the SP500 (SPX) and the Russell 2000. The SP500 closed at 2110.30, up 12.85 from previous close and the Russell 2000 (RUT) closed at 1231.79, 3.88 points above previous close. The technology weighted NASDAQ 100 (NDX) and the NASDAQ Composite (COMPQ) did not closed at a new all time high, but they both closed at a 15 years high. The NDX closed at 4443.05, a gain of 31.19 points and the COMPQ closed at 4955.97, +31.27. These levels were last seen in March of 2000, the beginning of the dotcom bubble burst. Presently, the NDX is less than 374 points away from its all time high of 4816.35, while the COMPQ is approximately 177 points or 3.6% from its all time high of 5132.52. Both of these high were made in March of 2000, the peak of the dotcom bubble.
Although last week’s market performance is astonishing and historic, but there are things that did not conform to a record breaking environment. Some of these things are: the failure from the Dow Jones Transportation index to close at a new all time closing high, the mixed breadth in the Russell 2000, and only a small number of stocks made new 52 weeks high. This non-conformance could be a sign the market is entering the final phase of an uptrend. This does not mean the market has topped. The indications are the market will continue to move higher until it has reached a turning point by completing the progression before a substantial pullback will occur.
In the meantime, let’s take a look at some potential upside price levels the market might be targeting in the near term.
DJIA:
The monthly chart for the DJIA shows it is still trending within a long term price channel, and the upper trendline level for the month of February is near the 18,735 which is approximately 600 points away from the current price.
(click on the chart to enlarge)
For the daily time frame, the daily price chart indicates there is confluence from Fib extension, symmetry move and measured move with the February price channel upper trendline level.
From these price charts, it appears the 18,700 region could be the near term upside price target to watch for the DJIA.
SPX:
For the SPX, its monthly chart shows a confluence between a rising long term trendline and the 161% Fib extension between the 2130 and the 2140 level.
On the daily time frame, the measured move price target from the recent triple bottom price pattern is added to the 2140 confluence level. Since the 2140 level is less than 30 points from the current price, there is a high probability SPX will exceed this level and move toward the 127% Fib extension near 2168 level.
NDX:
The monthly chart for the NDX shows how close it is getting back to the dotcom peak at 4816.35 and the confluence with the 216.8% Fib extension.
The daily price chart shows the recent bull flag breakout and the near term Fib retracement that have a 161% in confluence with the measured move price target of the bull flag near 4740 range.
RUT:
The Russell 2000 monthly chart is showing it is still trending within a long term price channel with more upside to go before it reaches the upper trendline near 1316.
And looking at the daily price chart, the RUT has a 141% Fib extension that is near the round number 1300. After the RUT get above the 127% near 1270, the 1300 level will act as a magnet and it will pull the Russell 2000 toward it.
Once again, last week’s action should not a surprise to us. The Dow Theory told us on December 29, 2014 that the DJIA will make a new all time closing high, and the market breadth A/D line also gave us clues that the SP500 will make a new all time closing high. Although the market told us what it was going to do, but it doesn’t tell us how and when it is going to do it. Therefore, we always trade the price toward the market’s destination. If the market’s destination is new high, one will look for opportunities to go long and stay away from the temptations to go short, and vice versa when the market is destine to go lower. The market is transparent to those that listen, it will always send out messages on its intention. And it's no different this time; it did what it said it was going to do.
Keep listening to the market and stop listening to those talking heads that conjure up fantasy and conspiracy stories about how the market will act. No matter how much financial engineering or market manipulation from the central banks, the market is and will always be the ultimate arbitrator on the direction it will move. As always, trade price not your bias and watch the price actions not fairy tales.
