Nasdaq Composite still has room to climb

NEW YORK, Aug 18 (Reuters) - The broader picture remains encouraging for the Nasdaq Composite, with technical analysis suggesting the index still has room to notch new highs and shrug off short-term wobbles.

The technology-heavy index, which tracks more than 3,000 Nasdaq-listed companies, achieved an important technical milestone last Thursday when it broke out of a short-term bullish pennant formation — a pattern that often signals the resumption of an uptrend.

Though the index has edged lower over the past two sessions, support levels have continued to hold, keeping the Composite within striking distance of its record highs. As of Monday's close at 26,644.91, the Nasdaq Composite was roughly 1.7% below its June 2 record closing high of 27,093.901 and about 2% beneath its June 1 record intraday peak of 27,190.21, according to data supplied by LSEG.

Adding to the positive view, the market's internals are sending an encouraging signal. The Nasdaq New High/New Low index, a closely watched measure of how broadly gains are spread across the market, has been trending higher since bottoming at 32% on July 31. It climbed for 10 straight sessions through Friday, before ending roughly flat on Monday, near 68% — a sign that more stocks have been joining the advance.

To build more confidence, bulls would like to see this breadth measure clear 72.6%, its early-June level, and eventually 77.1%, reached in late April. Doing so would offer stronger confirmation that participation and momentum are improving. Without broader participation, a rally led by just a few megacap names becomes harder to sustain.

What the chart shows:

• Bullish pennant breakout confirmed last Thursday
• Nasdaq NH/NL breadth index has risen toward 68%
• Nasdaq Composite remains roughly 1.7%-2% below its June record highs