The Stock Market Week - 5/23/2008 | ||
| All the major US indices were negative. For the week the Dow Jones Industrial Average dropped 507.17 points, or 3.91%. The Standard Poor's 500 Index dropped 49.42 points, or 3.47%, while the Nasdaq Composite dropped 84.18 points, or 3.33%. | ||
Nasdaq Trend Analysis | ||
| Last week we expected that the resistance level at 50.6 should hold, and the QQQQ price might move down toward the support level of 48.08. The QQQQ reached 50.47 on Monday. Then price turned down losing 3.62% for the week and closed on Friday at 48.2. | ||
| 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 still strongly overbought, while daily technical indicators are neutral. The price has broken the rising channel support level. The QQQQ might see a brief rebound or pause, but the technical indicators and the wave structure for both long-term scenarios suggest that the downtrend may continue. Risk/reward ratio is high. | ||
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| Presented by www.thegreedytrader.com Research Group. | ||
Sunday, May 25, 2008
QQQQ weekly indicator is still strongly overbought
