The "market" is not just made up of the S&P 500 but also includes the other major index in my opinion, the NDX 100. The NDX 100 to me is the higher beta view of the market though with AAPL making up almost a quarter of the movement in the Index, it makes me wonder if the "beta" end of things is not as accurate as it once one. In any event, in this weeks' Power and Force update, I look at the Nasdaq 100 Index (for S&P, see previous report). In short, the P&F model for the NDX 100 is actually stronger than that of the S&P 500. The NDX broke out on the close last week (versus hte S&P yesterday) and the index features a "PForce" model that never broke down (like the S&P). If you add in the NDX/VIX model which I have commented about often, the NDX is trading on very strong footing heading into what some ware terming the toughest stretch of September to come. So without much ado, here is the rundown on the P&F model for the Nasdaq 100.
Momentum
Contrary to the caution that is showing up in the momentum end of the S&P PForce Model, the NDX is displaying both strength in the current momentum as well as the leading indicator. In fact, the breakout in the leading indicator end of the model argues for another 10% higher for the index, which is inline with the last move in the NDX 100 from the 1700 level to the 2000 level earlier this year. Adding to this is a breakout signal registering on another end of the model which is more of an oscillator but also operates as a momentum indicator.
Oscillator
The oscillator is threatening to breakout in similar fashion to April of 2009. It is right at the top of the range though which means we are at a key juncture in terms of this indicator. The R Oscillator is also right at resistance but the way it is setting up, I don't expect it to be strong resistance. So net, net, the osicillators are not shouting sell just yet.
P&F
This model wavered a bit during the selling this summer but has since resumed its upward move. In fact, the force end of the model is at its best levels in a few months. In addition, the level of the force end of things looks very strong and not easily reversible. Thus the model is a support.
Summary
So each component displays, the NDX 100 is trading in the "strong category." The bulls hold the ball and when combined with the S&P model, this argues for the bull market to continue with the 1300 level sometime next year possible.
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