Nasdaq May Be Headed For 1,600 As Markets Retrace

Index Strat Risk Target DJIA [B]Long[/B] 7791 9860 NASDAQ [B]Flat[/B] 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. One possible target is 9864 (100% extension).

The Dow has started to trade lower after failing at 852 the 61.8% Fibo extension of the 9,795-6,470 decline. Given current momentum we could see a retrace back to 8,125 which has 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 traded back below 900 and is threatening to break from the current upward trend. The 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 broke below support at 1,700 leaves open a retrace back to 1,600-the April 20th low, where we could see staunch support. There we may see the current uptrend resume with another re-test of 1,785.