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 continues to consolidate near 852 the 61.8% Fibo extension of the 9,795-6,470 decline. The blue chip index may look to break out and test 9,000, where we may see the next level of major resistance. However, considering its difficulty to push beyond the resistance level a retrace back to 8,125 has to be a consideration.
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 down to 900 where it found support, which could be a sign that a test of the January 6th high of 943 appears likely as the dominant bullish trend continues. However, a break below the psychological support level leaves the door open for a retrace back to 850.
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 continues to find support at 1,700 which could lead to another test of resistance at 1,785-the November 4th high. 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.