Market in Position to Advance
The market is now in a much stornger position to advance and potentially end this correction. Here's why...
The last attempt to end the correction occured in early November, when the Nasdaq tested the 50 EMA (yellow highlight). At the time, RSI-20 (blue line) had made a long swing upward from 25 level, rising just above 50.
Long swings like this expend energy and make it hard for price to follow though to new highs, especially when price meets resistance (50-EMA).
In contrast, the Nasdaq is now testing a cross above the 50 level after setting a much higher low near 40. This means that price is stronger as it tries to advance.
In addition, there is positive momentum divergence on the recent undercut of the October low.
Bottom line: It's time to pay close attention to the price/volume action. A test up to the 7,400 level is possible by mid-December.
This could end the correction and set things up for the Santa Claus Rally into January.