Nasdaq Looking To Settle Into Range

Index Strat Risk Target DJIA [B]Long[/B] 7791 9860 NASDAQ Flat S&P500 [B]Long
[/B] 826 1080

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.” 9088 is the former 4th wave extreme and an objective. Near term, there is the potential for a drop below 8230 in order to complete an expanded flat.

The Dow found resistance at 8522 the 61.8% Fibo extension of the 9,795-6,470 decline. A break above there would leave 9,000 as the next barrier. However, if resistance holds we could see a retrace back to 8,120/30 which served as support in October and December of 2008.

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 was virtually unchanged after Monday’s push above 900. A test of the January 6th high of 943 is likely as the expected longer –term bullish trend continues to be fulfilled. However, if the broader index fails at the May 8th of 930 then downside risks would increase.

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 rose back above resistance at 1,725 the 38.2% Fibo level of 2,474-1,262 but it has failed to clear the technical level which leaves it susceptible to a retrace. Resistance at 1,785 could prove formidable if we see bullish momentum continue and may lead to future range bound price action.