Stocks May Decline as Nasdaq and Dow at Major Resistance Levels

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 was turned away by resistance at 8,315 the February 9th and could look to return to support at 8,000. The level may be formidable and may require several tests before we see it fall. However, another test is a possibility and a break above would leave 8,500 as the next resistance level.

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 again failed to hold above resistance at 875 which could lead to a retrace today back to support at 855. If the broader index is able to conquer the level then a test of 900 could be imminent.

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 broke above resistance at the 38.2% Fibo level of 2,473 – 1,265 decline but failed to overcome the 200-Day SMA at 1,747. If the major technical level holds today then we could be in store for a retrace back to support at 1,600. However, a break above could lead to a test resistance at 1,785-the November 4th high.