Index Strat Risk Target DJIA [B]Long[/B] 7792 9860 NASDAQ [B]Long[/B] 827 1080 S&P500 [B]Flat[/B]
To review: “The decline from the October 2007 high is in 5 waves, therefore a multi-month countertrend 3 wave advance is underway. Fibonacci resistance does not begin until 8736.” Wave B within an A-B-C corrective advance from 6470 is complete at 7792. The Dow should rocket higher in wave C in the next few weeks. One possible target is 9864 (100% extension).
The Dow fell back below resistance at 852 the 61.8% Fibo extension of the 9,795-6,470 decline. The blue chip index may continue to consolidate in this area before a breakout. 9,000 may be the next level where we see major resistance.
The S&P count is the same as the Dow count. A B wave is complete at 827. A target is 1086 (100% extension) and the index should remain above 827.
The S&P 500 traded back below the January 9th high of 910 and like the Dow we may see continued consolidation before a breakout. A test of the January 6th high of 943 appears likely as the dominant bullish trend continues. However, a test of support at 900 is a possibility before an extended move higher.
The Nasdaq is in the same position as the other US indexes although the short term pattern is not clear. A deeper corrective rally is likely; perhaps to the 50% at 1902 or the 61.8% at 2094.
The Nasdaq may find resistance again at 1,785-the November 4th high after finding support at 1,700. Upside potential remains with major resistance at the 50.0% Fibo level at 1,868. However, a retrace back to 1,600 is still a possibility, where we may see ultimate support before a long-term extended rally.