In Saturday’s newsletter we dissected the S&P 500’s chart to within an inch of its life, though we could have done the NASDAQ just as easily. And, it would have been just as telling. Since such an analysis may have value to some of our readers (who are more into tech and stocks of all sizes), here’s a similar look at the composite’s good, bad, and ugly as of last Friday.

First and foremost, don’t be shocked that the NASDAQ posted such strong numbers on Friday, gaining 34.94 points to close out at 2153.63. Though still in the hole for the week, the bulk of last week’s damage was confined to one day….. Tuesday. Moreover, when you take a step back and look at the bigger picture, the bullishness from Wednesday and Friday starts to look like more than luck.

To be specific, the composite seems to be finding support at two former proven support lines - the horizontal floor (black, dashed) at 2100, and the lower Bollinger band (red) at 2091.

In fact, when taking the bigger-picture look, it becomes pretty clear the NASDAQ is simply range-bound, as it has been since May, between the two dashed lines. Last week’s bullishness is just an attempt to push off the lower edge of the range. And, odds are that it will be able to make good on the effort, especially considering the strong volume buy-in and strong reversal bar we saw on Friday.

As you may have been able to guess from the chart, no amount of bullishness will mean much unless the composite can actually get past the whole mess of moving averages as well as the upper Bollinger band, which will be around 2300 by the time it can be retested. The upper edge of the trading range is at 2311 (blue, dashed), which we’ll use as the final bull/neutral decision point.

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