Turnaround Tuesday:

The Nasdaq certainly lived up to that saying today, as the tech rich benchmark rose nearly 4%. Below is the chart of the index and how it appeared in our tech note a few days back. The very round 13000 number was a line in the sand, with the break below a bearish head and shoulders. Tuesdays action may prove that breakdown merely a bear trap. On the chart below we can see the last couple times the Nasdaq pierced the rising 50 day SMA last September and October, it reclaimed the moving average in quick fashion. We know there would have been plenty of stops placed below the line, but are investors becoming too complacent with these rapid corrections? As long as PRICE stays above the 13000 number, I would have to think technology can be bought. I did hear some chatter that many investment managers are still not positioned for the rotation out of growth into value. Perhaps if that is true they are waiting to see how the dust settles, but then again we could also see growth AND value perform. Maybe the latter acts better, and it is certainly due to do so with many false starts over the years. 

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