From the May 01, 2009 issue of Futures Magazine • Subscribe!

Nasdaq on fire

Among many analysts the Nasdaq 100 is the best indicator for equities among all the indexes. That has been true in the upward correction that began on March 10. The NQ never took out its November lows and has moved into positive territory for the year.

“I feel a little safer being in the Nasdaq 100 than the broader market,” says Tom Grisafi, president of the Indiana Grain Company and an independent trader. Grisafi says going from 5,000 to 1,000 earlier this decade has taught the constituents of the Nasdaq 100 Index some important lessons.

“When people needed money they exited every asset class, now anyone with any money is looking for bargains,” he says, adding that there are more bargains in the technology sector than any other. “It is the safest and easiest way to stay long,” Grisafi says, adding, “None of these Nasdaq companies are going into bankruptcy.”

Grisafi says that the NQ could reach 1450 in May. He is not convinced the market has hit bottom but expects the Nasdaq to outperform the broader market.

Jeff Greenblatt, director of Lucas Wave International, says the NQ faces three significant overhead resistance levels: at 1382, 1411 and 1440. Chances are the market will battle it out at those levels prior to publication but Greenblatt, like Grisafi, expects the Nasdaq to outperform the broader market. If the S&P 500 makes a marginal low, “don’t expect the NQ to confirm it,” Greenblatt says.

However, he does expect the NQ to flatten out at one of those resistance levels.

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