Technicals

Dow Targets Fibo Resistance After Setting Fresh Yearly High

As is often the case in Elliott, the picture is becoming much clearer as the rally has matured and nears its end.  The advance from the March low is a complex W-X-Y (a-b-c-x-a-b-c) rally.  The Dow has actually satisfied minimum expectations for the rally by exceeding 9918 (wave iii of c) so a reversal could occur at any time.  Wave c of y would equal 61.8% of wave a of y at 9947.  Momentum is as one would expect at an important top with RSI failing to confirm the new price high.

The Dow accelerated its gains after reaching back above 10,000, setting a fresh yearly high of 10,228. The broader index appears headed for a test of 10,326 the 50.0% Fibo retracement of the 14,198-6,543 decline. We also see possible trendline resistance which could make the level formidable and lead to a retrace back toward support.

The S&P is in the exact same position as the Dow. The analysis presented there applies here.

The S&P 500 is now targeting 1,100 after finding trendline support, with the 50.0% Fibo level as the next barrier.

The NASDAQ pattern is the same as the Dow and S&P patterns with one exception – this index has yet to exceed its September high.  It’s interesting that the NASDAQ is the weaker of the 3 indexes at this point since it is the one that has led the advance since March, retracing a larger percentage of its 2007-2009 decline.  It is possible that the divergence (new highs in Dow and S&P, not in NASDAQ) sets up a non-confirmation that results in a turn lower.  In Elliott terms, failure to exceed iii of c would constitute a truncation.

The NASDAQ has seen trendline support reverse its direction and is now looking to test the yearly high of 2,190. There is possible resistance from former longer-term trendline support.