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. Today’s decline marks the beginning of what is probably wave B of an A-B-C corrective advance from 6470. Expect weakness down to 7080-7280 over the next month +.
The Dow failed to hold onto its gains yesterday as it found resistance at 8,000 before re-testing 8,089 the 61.8% Fibo level of the 9,088 – 6,470 decline. The blue chip index appears to be range bound and thus we could see a test of support at 7,750 today before a move higher. Regardless, we may see choppy sideways action 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. A rally above 876 would negate the near term bearish outlook.
The S&P 500 failed to old onto its gains after breaking back above support at 835. If we see support hold after another re-test then we could see the broader index remain in a tight range.
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. Exceeding 1682 would negate this outlook.
The Nasdaq once again found resistance at the January 6th high of 1,666 and may now look to test support at 1,598 the former resistance level of the February 10th high. The sharp drop in the tech laden index after reaching the resistance level signals has become critical and a break above it could lead to significant gains. However, until then we may see the index remain range bound between it and support at 1,600.