The Stock Market Week - 5/9/2008 | ||
| Last week we suggested that short-term market outlook is negative All the major US indices were negative. For the week the Dow Jones Industrial Average dropped 312.32 points, or 2.39%. The Standard Poor''s 500 Index dropped 25.62 points, or 1.81%, while the Nasdaq Composite dropped 31.47 points, or 1.27% | ||
Nasdaq Trend Analysis | ||
| QQQQ Long-term technical analysis: Our long-term outlook has not changed. We consider two possible scenarios: Scenario 1. The long-term uptrend (10/08/2002 - 10/31/2007) is over, and a new long-term downtrend started on 10/31/2007. The sub wave 2 (0/31/2007 - present) is currently in progress and almost completed. The sub wave 3 down should start soon and break the long-term support trend line around 43ᇀ, and then it'll go lower than the recent low of 41.05 and move down to about 35 in the late fall. Scenario 2. The long-term uptrend that started on 10/08/2002 is still in progress, with sub wave 5 currently in progress. The wave 5 is usually tricky. It might be truncated and form a double top pattern or not even reach the previous high - 55.07. Which scenario we are going to see may depend on how successful the FED's rate cut would be. The FED's market regulation supposed to weaken the upcoming recession, but FED should not use their power to turn the recession into a new bull market. If FED overdoes the rate cut, we may see the scenario 2. With this scenario, by the end of the wave 5 FED will not have enough room for a new rate cut, and the next long-term downtrend would be even more severe. | ||
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| QQQQ Short-term technical analysis: Weekly Lane's Stochastic is overbought. Daily MACD has bearish divergence. The price is near the short-term rising channel support line - 48.25. If support holds, the QQQQ may reach the channel resistance level near 49.6. This level is close to the Fibonacci 62% retracement. Overbought stochastic would make this resistance level pretty strong. If the price breaks the support line, the next support is at 46.6 and then around 45. The QQQQ may retest the long-term support around 42-43 as well. Overall risk/reward ratio is still pretty high. | ||
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| Presented by www.thegreedytrader.com Research Group. | ||
Sunday, May 11, 2008
QQQQ may reach the channel resistance level near 49.6
