Nasdaq 100 Scaling the Wall

In this Aug. 23, 1961 file photo, a boy sitting on the shoulders of another child peers at the Liesen street in Wedding, West Berlin, over the wall towards the eastern part of the city. Berlin begins remembrance celebrations of the 50th anniversary of the construction of the Berlin Wall on Tuesday, June 14, 2011. (AP Photo/Werner Kreusch, File)

Walls have been part of history for a very long time. They have been built for protection. They have been used to keep things both in and out. They become a part of the fabric of civilization. It was opening the wall at the city of Troy that allowed the Trojan Horse to enter. The Great Wall of China has now become a major tourist destination. The Berlin wall was a symbol of hatred and its destruction one of reunification.

There are walls in markets as well. They do not get the same attention as the walls mentioned above, and for good reason. The walls in the market are often built in our minds, just figurative walls. A wall of worry for stock prices to climb. There have been such walls is the markets made a low on Christmas Eve. Massive rallies have ensued leaving the major indexes up between 9.5% and 14% this year. But they still have a wall to scale.

The Nasdaq 100, represented by the ETF $QQQ above, may be the first to scale that wall.In fact there are two barriers in this chart. The first is the 200 day SMA. The QQQ has not spent more than 2 consecutive days above it since October. It is right up against that wall again now. The second is the December 3 high. A push over that, to a higher high, would be a first move over a wall.

Momentum is on its side. The RSI is rising and in the bullish zone and the MACD is positive, and avoiding a cross down. The Bollinger Bands® are also shifted to the upside. Clearing these barriers will not guarantee that the markets are free of the downturn. But it is will garner new investors on the sidelines and set up for the next ascent for another new high.