Set for a correction

B. Krishnakumar

AFTER some subdued market activity in the earlier week, the market sentiment turned positive with all the three benchmark indices closing on a positive note in the week gone by.

While the uptrend in United Technologies helped the Dow Jones Industrial Average close on a positive note, the weak trend in IDS Uniphase and VeriSign dragged the Nasdaq Composite Index to a lower level on Friday.

The firm trend witnessed last week was not in sync with last week's expectations. Contrary to last week's opinion, the Nasdaq Composite Index managed to log net gains for the week. It posted a net rise of 5.8 per cent in the past five days.

Going by the Elliott Wave Analysis, there is a case for the Nasdaq Composite Index to have completed the recent run-up. A close past 1800 could push the index to further highs. On the other hand, a drop below 1628 would confirm that the index is headed towards lower levels of 1500-1550.

As iterated in the earlier weeks, the bearish trend would resume once the present upmove gets terminated. A possibility of the retest of the earlier low made at 1380 is still on the cards.

(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)