Elliott Wave (2/26/01)..
Today's [NASDAQ] rally was not as strong as the other blue-chip averages, but it nonetheless fulfills our call from Friday for "a near-term bounce." A five-wave decline from the January 24 highs appears complete at Friday's lows, subwave one of 5. If so, a bounce now should correct the entire decline from the January 24 highs. None of the NASDAQ indexes even achieved a test of our first listed resistance from Friday, so odds are the bounce has further to go before ending. As before, first resistance is 2330, followed by 2435 in the Composite. The equivalent resistance in the 100 cash is 2130, then 2240, in the futures it's 2140, then 2250 and in the Q's it is 53.15, then 56.20. The indexes will probably make a run toward the higher resistance levels, but we will see how prices act in the coming day or so. Any violation of Friday's intraday lows indicates another leg down in the larger bear trend is underway, possibly into the next Fibonacci turn window of March 7-12.. These lows are 2156 in the Composite, 1935 in the 100 cash index, 1940 in the futures and 48.23 in the Q's.
The rally in the [March S&P 500] was in line with our call for "a bear market rally for several days." The indexes have thus far rallied in three-waves, pushing to just above our first cited resistance. The key support level is now this morning's swing low of 1244 (1241.71 in cash). As long as this level remains intact the indexes hold the potential to continue to rally. A break of these levels indicates that the rally is over, and another leg down in the larger bear trend is likely underway. Friday night we cited higher resistance of 1279.50-1287.20 in the futures, 1276-1283 in cash. These higher levels remain going forward, but they will only be relevant as long as prices hold above the swing lows we cited. Remember, we said that once the neckline of a head-and-shoulders pattern is violated, often prices will rally back and hang around the busted neckline for a bit, before falling again in the next leg of the larger downtrend. That appears to be happening now. A strong close above our cited resistance would open the door to more short-term bullish potential, possibly lasting into the next Fibonacci turn window of March 7-12.
The [Dow Jones Industrial Average] pushed strongly higher today, almost testing our second resistance area of 10653-10670. Bear market rallies are fast and furious, squeezing as many shorts out of the market as possible. Today's market action appears to be a classic example. Tonight we are going to extend our cited resistance area up to 10726 where a small-degree second wave high resides. This level is also near the break down level that occurred after the index topped at 11035 (Feb. 6). The Dow should see this resistance as formidable if the bear trend controls price action. We are looking for a break below this morning's swing low of 10422 to indicate that the next leg down in the larger downtrend is underway. As long as the index holds above this level, it retains the right to continue to rally. Higher resistance is 10788. Anything much above this resistance level indicates another assault on the psychological 11000 level is probable and increases the odds that the alternate wave count listed at the bottom of the chart may be in effect. This alternate considers Friday's low as the bottom of a 'b' wave. Wave 'c' up would likely carry the index to slightly above the recent 11035 high before topping. Once the next leg down is confirmed (by a drop beneath 10422), prices are likely to fall into lower support of 10150-10200. As before, the key level is the 9654 low of October 19. A break of this low would scare a number of people and likely set off further selling pressure.
Our near-term forecast for the [XAU] remains on track. Wave 'c' up is underway and should carry the index toward resistance of 55.30-58.00, where a number of Fibonacci relationships exist between waves. Near term, prices are getting a bit ahead of themselves and may pullback. But the rally is not over. If you are not aboard and wish to be, we would use any pullback that may materialize as an opportunity. Wavers, we turned bullish the XAU at 49.75 (Feb. 23). The index could pullback toward support surrounding 50.00-50.75. Tonight we are adjusting our protective sell stop to 48.75. If you are more aggressive, you may want a tighter stop to lock in profits. We are still bullish on [Barrick Gold Corp.: ABX] and look for a push toward first resistance of 18.35-18.83. Prices should ideally not be below 14.90 again if our assessment of a continued rally is correct.
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