NASDAQ Confirms Our Bullish Technical Trigger - Blue Skies Ahead

Published on March 9, 2018 @ 8:24am

It's been much more than a minute, but we've finally got the big technical we've been looking for confirmed this morning - a break above the 7,440 February high on the NASDAQ Composite. This move also comes on the heels of an excellent jobs report this morning - with 313K new jobs being added in the month of February.

To boot, the job participation rate came in slightly higher than expected at 63%, while unemployment remains around historical lows at 4.1%. Interest rates and inflation both remain tame - once again suggesting the U.S. economy may very well still be in a middle cycle growth phase.

So now what? We are now strongly convinced the markets are in a position to make new all-time highs again. We've been expecting today's pivotal event on the NASDAQ Composite for days now. More importantly, we've have continued to reiterate once we got it, the long-term bullish landscape for stocks would remain intact.

It doesn't necessarily mean the markets are going to start screaming higher now, but it is possible. What it does mean to us, however, is we still think there's plenty of upside ahead for stocks over the next several months, and potentially even the next year or two. The latter is way too speculative to predict at this point, so we'll just have to see how the fundamental economic landscape unfolds, along with the macro earnings picture.

With that, we've got a number of our most recent newly added long-term ideas behaving very well.

On a side note, the White House announced yesterday afternoon Trump will meet with North Korea's Kim Jong-un in a first ever sit down between a U.S. President and North Korea's "Supreme Leader". Interestingly enough, this comes on the heels of some new import tax tariffs Trump signed just yesterday, whereby a 25% tariff would be imposed on any steel and aluminum imports coming from other countries - excluding Canada and Mexico for the time being.

What does this have to do with North Korea? The above mentioned meeting was delivered by South Korea's National Security Adviser Chung Eui-yong, and for those who might not be aware, South Korea is the third-largest exporter of steel to the United States, after Canada and Brazil. Japan too exported 1.9M tons of steel to the United States last year and 33,000 tons of aluminum.

From what we can interpret here, it appears the White House may have found a way to leverage foreign trade in an effort to apply pressure on North Korea's nuclear weapons program. It's a little too soon to tell, but that's the way it's starting to shape up anyway. We can only hope, as it would be a great day to finally have North Korea start acting like a responsible Government entity. That might be asking a lot, but history has achieved more.

As for the S&P 500 and the DOW, both continue to lag, however, both are also having good days on the heels of some nice economic data this morning. We'd prefer to see both behave much better with the NASDAQ now confirming a key long-term bullish technical event, so we'll have to see if these two key indices can pick it up as soon as next week.

Neither are out of the woods yet, which you can see in these daily charts of both below. There appears to be a bit of a contracting triangle wedge developing for both. Meaning, a series of lower highs, but also a series of higher lows. This actually is somewhat of a concern for the very near-term landscape, which is why we think there's still the possibility of lower levels ahead, before the markets may be in a position to make new all-time highs again.

However, like we mentioned above, based on the key bullish confirmation we're getting on the NASDAQ today, it's only a matter of time before all of the major indices make new all-time highs again. For now, we'll continue to look for more quality names to add to our long-term list over the next few weeks, as well as consider cutting some of those ideas on our list that just can't seem to outperform the markets recent moves higher.

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Sincerely,

John Monroe
Lead Analyst @ Viking Crest