NASDAQ COMPOSITE monthly update

A picture does indeed tell more than a 1000 words the Nasdaq without the big Apple weighting is very clear about what will happen going forward as are the SPX and DOW. We brooke out of the uptrend channel within the bigger sideways trading band for 10 years now. we tested back and turned down again in a multi weei consolidation pattern. What we have here is an accident waiting to happen. It is not a question if it happens only when and how deep. The absolute minimum short term (within 10 days) is 2280-2300 matching the 38% . A mandatory target within Q4 is 2100 the 50% level and a strong support from last summers correction. I doubt we can reach that for now except a bigger bank goes broke or Greece declares bankruptcy within 1o days. A suspect even it was due they rather cover it up and buy some time as the ECB will very likely cut rates this week despite the inflation far above their target level of 2 %. If they cut rates this week it will be a strong confirmation that the system is broke and they pull desperate measure waiting for miracles. as mentined earlier due to extreme oversold levels soon and very bearish sentiment I rather expect a rally from a 1050 SPX level up to 1200 even after the panic sell off starting mid Oct and lasting up to 4 weeks roughly. For the Comp that means from a level below 2300 ( can go as low as 2200) back up to 2600 very likely. That will be a level to enter shorts again for a drop to 2100. For now the biggest risk iis in the financial sector but the problem filters through the system and will hit fundamentally also the tech sector as the banks will have to fire much more people in Q4 and cut down on tech spending, which will be a general theme for the industry as well later in q4 which is the high time of tech spending.

~ by behindthematrix on October 3, 2011.

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