Monday provides a perfect case study for how trends change. In case it wasn’t obvious, the downtrend in the Nasdaq is officially over. If you’re using the daily trend as your guide, and you haven’t shifted to a more bullish posture, then I haven’t a clue why.

Let’s chronicle this turnabout from downtrend to uptrend one step at a time.

–Step One: The downtrend showed slowing momentum by building a double bottom pattern last week.

–Step Two: The rally off the lows pushed prices back to resistance on Friday. At a minimum this would have resulted in an equal pivot high, signaling a neutralizing of the downtrend.

–Step Three: Volume swelled during the bounce off the bottom, signaling institutions were wading back in.

–Step Four: Prices cleared horizontal resistance ($273) today, guaranteeing we’re going to see a higher pivot high.

–Step Five: Volume was above average today in a continuation of last week’s accumulation.

–Step Six: Since the 50-day was also positioned at $273 resistance, we’ve broken above it too.

Does this mean the Nasdaq is destined to make new highs? I would assume so. But remember, we’re not in the business of predicting the duration and magnitude of the trend. Instead, our job is to simply be on the right side of it. And after today, I can confidently say that trend is pointing up, not down. The tech-laden train is heading northbound, not southbound.

Until we get a break of support and re-entrance to a downtrend, I’m riding with the bulls.

What of Other Indexes?

This is where things turn murky. While the Nasdaq has succeeded in turning its daily trend higher and reclaiming the high ground above its 50-day moving average, the S&P 500 has only partially reversed. After forming a lower low on slowing momentum, SPY succeeded in breaching a prior pivot high on Monday. However, it stopped short of taking out the 50-day moving average so there’s still some work to be done.

Nonetheless, I’m still assuming the break is imminent.

Finally, we have the Russell 2000 Index. If you want to stubbornly defend your bearish bias, then this is the Index to cling to. Despite Monday’s 2.5% pop, its daily downtrend is still intact.

Unfortunately, if you wait for everything to return to uptrending status before changing your bearish bias, then you’ll likely have to lock-in bigger losses down the road.

For my part, I prefer to shift quicker. Monday’s evidence was sufficient to justify closing some bear trades while adding bulls in my opinion.

Ok, bulls. You’ve got your foothold. Now push it. Push it real good.

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