NASDAQ Possible Downside Targets:
With the break below 3500 today it is hard to find a way that the NASDAQ double top at 4260/4290 has not been confirmed. I think 3500 was the last possible support line to take out for this chart formation. Therefore, what are the likely downside targets of this breakout:
1. If you draw 3500 as the horizontal support, then the distance from double top to support is roughly 750-800 points, suggesting a downside target of 2700-2750.
2. If you draw the support line at 3600, then downside target would be 650-700 points which would take us to 2900-2950 area or just below May bottom at 3042. (NASDAQ tends to overshoot support.)The 1.618 retracement would be at 3064, also very near the May low.
3. If you draw 3700 as the support line (my preference, and basis of my forecast last week that we had a 50/50 chance of testing the gap at 3227 soon), then the downside target is about 550 points or 3150. Coincides closely with end of May gap at 3227, plus some overshoot, and the 1.50 retracement which would be 3151.
Anyway you look at it, it appears likely that we have another 300+ points to decline, possibly this week. I would up my probability for retesting 3227 to more like 75% now, and chance of retesting 3042 is rising also.
CSCO, as a bellwether for the NASDAQ - Will likely hold above 50 as signs of accumulation are showing up in the money flows and price action this past week. Seems all those who wanted to dump it finished before quarter-end, and some quiet accumulation has now begun.
Good trading to all,
The Phoenix |
