Former Resistance Levels May Lend Support As Equities Look For Direction

Index Strat Risk Target DJIA [B]Flat[/B] NASDAQ [B]Flat[/B] 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.” The short term pattern has cleared up a bit. Wave B within an A-B-C corrective advance from 6470 may be underway now towards 7080-7280. This process could take at least a month.

The Dow continues to remain range bound after another test of resistance at 8,089 the 61.8% Fibo level of the 9,088 – 6,470 decline. Therefore, we may see another test of support at 7,750. Unless we see a clear break of support or resistance, choppy range bound price action may continue over the short-term.

The S&P count is the same as the Dow count. A B wave decline is most likely underway towards 740-764.

The S&P 500 is once again been turned away by resistance at 875. Therefore, we could see a test of support at 835 over the next few days as range bound price action continues.

The Nasdaq is in the same position as the other US indexes. Expect a decline in wave B towards 1410-1458 over the next several weeks.

The Nasdaq failed to break above psychological resistance at 1,700 broke resistance and is threatening to fall back below the January 6th high of 1,666. We could see a test of support at 1,650 if bearish momentum continues.