Nasdaq: Still in a corrective phase

B.Krishnakumar

After a strong rally in the first few days, the market sentiment turned relatively subdued towards the close of the week gone by. The Nasdaq Composite Index was confined to a narrow range on Thursday and Friday.

The benchmark indexes rose for the sixth week in eight on reports of falling unemployment claims and resurgent retail sales.

For the week, the S&P 500 climbed 1.6 percent. It has gained 18 percent from a three-year low recorded on September 21. The Dow advanced 2.7 percent, for an eight-week gain of 20 percent. The Nasdaq rose 3.8 percent and is up 33 percent since September 21.

In line with expectations, the Nasdaq Composite Index reversed direction right at the projected target zone of 1900-1930. After touching a high of 1922.45, the index turned weak on Thursday. The immediate resistance is now placed at 1933, followed by 2000 and 2100.

As iterated in the earlier weeks, the ongoing rally is still to be viewed as correction to the overall bearish trend. A decline below 1760 would trigger bearish sentiment. While the Nasdaq Composite Index could see some firm trend in the near term, the entire move from the low of 1357 appears to be some sort of Wave 4 correction in Elliott Wave parlance.

(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)