Fibonacci analysis: Russell, Nasdaq and Dow

Fibonacci Forecaster

Remember a couple of weeks back I told you the key to these markets could be the reaction of Shanghai to Europe? That connection really hasn’t played its hand yet but the European markets start the new week right at a key inflection for the DAX testing the key trend line again while the FTSE tests a key Fibonacci interleg relationship.

In the interim the story has been the Russell 200 which has been leading to the downside. In fact while Janet Yellen fiddled with her testimony the Russell burned. The week closed better but the price action still closed below the 200-day moving average.

We’ve covered why the Russell shouldn’t be leading to the downside and so it was another week without repair. As far as the economy goes, the market is a leading indicator and the environment is no longer supportive of small caps. The impact will not be felt on Main Street for 6-9 months. Consider it an overall tough year for small caps to develop into major behemoths.

The next problem is the HGX which did nothing last week. Its best effort was Thursday and that was a failed attempt to go higher. The BKX is defending the 200-day movign average and while it’s still in a downtrend it does not appear ready to drop just yet. Biotech has been very inconsistent and while they’ve put in a couple of higher lows it can’t get beyond lower resistance levels. One area that has been doing well is oil stocks and that finally stalled on Thursday. It’s not something you would buy right now but it certainly has not confirmed a high.

The Nasdaq (CME:NDM14) representing the best of technology was still repelled by the trend line.

Finally, we have the Dow which may or may not be tracing out an ending diagonal wedge. But what I can tell you with the big red bar on Tuesday, bulls failed to push their edge and get those bears to capitulate because we as of yet haven’t seen those people fully squeezed out of the market. For you Dow theorists the Transports might very well be tracing out a wedge.


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A really good squeeze would’ve caused a good green follow through bar on Thursday or Friday and it didn’t happen. While all this was going on the Dow once again put in a new closing high.

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