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Hello Fellow Chart Watchers! Another up-and-down week on Wall Street left the major stock averages mildly higher with the Nasdaq posting the largest percent gain (5.58%). Now at 2191, the Nasdaq continues to close in on its current resistance zone - the area around 2300 that served as the springboard for its January rally. This old support level failed in early February after the January rally collapsed and is now considered a strong resistance zone. Will the Nasdaq's current rally be able to conquer 2300 this time around? Market breadth charts may hold some answers. Some of the most popular market breadth charts are derived from either advance-decline data or new highs-new lows data. Our "Market Breadth" page summarizes those indicators and boy does it paint a positive picture right now! But how much longer can all of the breadth charts go up? Stockcharts.com also provides a collection of totally unique breadth indicators - our Bullish Percent Index (BPI) charts. These charts are calculated by determining the percentage of stocks in a given group that currently have bullish signals on their Point and Figure charts. Here's a long-term chart of the Nasdaq's Bullish Percent Index overlaid with the Nasdaq itself:  (Click here for a live version of the Nasdaq BPI chart) I realize that this picture is a little complex, but bear with me. It shows the Nasdaq BPI as a thin black line with the Nasdaq itself as a thin red/black line. The "price label" boxes appear whenever the BPI made a significant peak or trough. The important thing to note here is that when the BPI rose above 50, the Nasdaq moved lower. That's what the red highlighting boxes attempt to show. This occurred even when the Nasdaq was in the midst of its 1998-2000 "bubble" rally (the first two red boxes)! What's even more troubling is that since the market turned in March of 2000, readings above 50 on the Nasdaq BPI preceded particularly swift downward moves. So what's the current Nasdaq BPI reading? 50.75 Be careful out there.
WEAK JOBS REPORT. . . A very weak jobs report this morning contributed to a sharply lower opening in stocks. Given the short-term overbought nature of the market, a setback was expected. That's all the more reason why the market's upside turnaround was so impressive. All the major averages closed sharply higher. GROUP LEADERS. . . The day's Nasdaq leaders were in the biotech and networkers. On the big board, banks and brokers were strong - as were the drugs. Oil stocks bounced back strongly. Some profit taking was seen in the airlines, golds, and semiconductors. Several individual stocks appear to be on the verge of bullish breakouts. IBM TESTING RESISTANCE. . . IBM has been one of our favorite tech stocks. Earlier this week, the stock backed off its February high near 119. Its volume pattern is positive. We think the odds are very good for a bullish breakout.  If you like John Murphy's commentary, visit his website to learn how to receive it on a daily basis.
Here are some links that should help you get started:
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