gem-x's Elliott Wave Forecast: Feb 26, 02
Ok, the NASDAQ now has a completed morning star...and it looks pretty textbook. The SOX had a really perfect and gorgeous morning star, as did big caps like INTC.
This is no guarantee of a bottom, but the chances have increased dramatically that last Friday was..
The two big problems that I saw with the rally today, even though the morning star is just about picture perfect, were the advance decline line, and the volume....Advancers barely beat decliners, and the volume wasn't noticeably larger.
But if you look at possible reason for why it wasn't larger, there are a lot of NASDAQ stocks that are lagging behind the NASDAQ and are just completing their corrections...for example, BRCD just got a hammer today (was also an engulfer on an outside day), but the NASDAQ got it's hammer on Friday...this would account for the lighter volume....if this is the case, the stocks that are 2/3 the way through the morning star, could complete the other 1/3 tomorrow, and a more dramatic rally could unfold tomorrow.
BUT, if you look at the morning star in December, it too was textbook, and during the retest of the low, it failed and dropped to 1918. Check out the chart I've included..it shows all the morning stars, successful or failed, as well as the evening stars..
angelfire.com
The upward channel is still intact, but is close to breaking...if the futures gap down, than there could be a retracement of the move from 1696 to 1776 or 1715 to 1776. It could be a retracement of 1715 to 1776 because that move was about 1.618 X the move from 1696 to 1736 from Friday.
I'd expect a retracement, to 1745/1753, should there be a drop in the morning..and a final move up to around 1785/1793.
But if the futures gap up and the NASDAQ moves up on strong volume with no channel break, this move could extend.
We've just about broke the through the down move from 1777 to 1696, so if 1777 breaks, the next move should retrace the downwave from 1877 to 1696 moving up...the levels to watch would be: .500 retracement is 1786, .618 is 1808, and .78 is 1838.
If there's a large rally tomorrow, and breaks 1838, the next retracement wave would be the move down from 1959 to 1696..
A lot to swallow, eh? In order to figure where the next move is, I'll be watching the channel tomorrow and those retracement levels.
By the way, the DOW broke its .78 retracement level from the winter high and winter low, so it has a clear path to 10345 (winter high) |
