Drop and Pop NASDAQ fills morning gap to end day higher. Watch triangle boundaries Monday. The commentary on this page is based on the NASDAQ Composite index. Equivalent numbers for the NASDAQ 100 are in ( ) within the commentary. - SW Team From Yesterday's commentary, "...The NASDAQ ended the day consolidating at the highs just beneath resistance (15 Minute Chart), which implies further strength tomorrow...A break either way from the consolidation is likely to determine the day's trend..." The NASDAQ gapped down this morning, a Drop and Pop. The index immediately filled the gap to the upside and ultimately end the day positive. This once again points to the reason for our 30 Minute Rule - going Short at the Open would have been a big mistake. Looking at the 15 Minute Chart, you see that the NASDAQ consolidated at the relative highs the rest of the session, forming a triangle pattern that is very "tightly wound" to a point. This gives us very tight but solid levels to watch for breaks. We will watch 1,450 (1,090) up, and 1,440 (1,080) down for the break, as a break of either of the levels has potential to move the index. Short Term NASDAQ Short term, the NASDAQ has formed a clear bearish pennant in the 1 Minute Chart. This is an indication of a possible downside break for Monday's Open. Watch 1,445 (1,085) for the break. Medium Term NASDAQ In the medium term, we closed our Long position this morning at the Open at 1,422 (1,060), taking a 7 (11) point loss in the trade. We later entered Long at 1,443 (1,082), but took a 5 (5) point loss in the position. We are now out of the market and will watch 1,450 (1,090) up, and 1,440 (1,080) down for Monday's market, with 5 (5) point stops. Observe the 30 Minute Rule. Summary The NASDAQ did a "Drop and Pop" today, sending the index higher after intially gapping down at the Open. The index ended the day near the session highs within the boundaries of a tight triangle. Watch the tight boundaries for Monday's market: 1,450 (1,090) up, and 1,440 (1,080) down.