Nasdaq: Critical days ahead

B. Krishnakumar

IN tune with last week's expectations, the short-term trend in the NASDAQ Composite Index was positive. Helped by the rally in semiconductor stocks, the index managed to rule firm in the first four days of the previous week.

However, the US stocks turned weak on Friday as semiconductor shares snapped a seven-day winning streak. Other computer-related stocks such as Microsoft, IBM and Sun Microsystems also declined, resulting in a drop of about 22 points in Friday's trading.

In line with last week's anticipation, the index reversed direction right at the resistance level of 2100. After touching a high of 2102.53, the Nasdaq Composite Index reversed direction to end the week at 2066.33.

Technically, only a break above 2181 would impart some sort of bullishness in the market. Else, a test of 1800-1850 range appears to be on the cards in the near term. A move past 2181 would be an indicator of further up move in the market. This could also pave way for a rally up to the 2600-2650 range.

Given this backdrop, the price action over the next few days assumes greater significance. Though the continuation of a weak trend is the preferred view, this view would stand negated if the index moves past 2181.

(Note: The analysis and opinion expressed in this column is based on the technical analysis of the past price behaviour. Analysis and price targets are based on Elliott Wave and Point & Figure techniques. There is a risk of loss in trading)