May 2007 Commentary

Let's look again at NASDAQ and its direction. We are very close to the next probable target at 1930 to 1940 range. This target is based on the Fibonacci numbers and their application to the Elliott Waves concept. Because we are relying on resistance and support levels, is there any resistance left between our target and now? The answer is no and the price should reach the target. Will it peak above the target? The  Elliott oscillator must gain more strength, the green and red histogram at the bottom of the chart. As it stands now, the oscillator has not peaked above the previous level, that could be a sign of weakness usually present when we are looking at a fifth wave. Since our wave count suggests that we are in a wave 3, we expect the oscillator to gain some strength. Now we have to prepare for the next step should the price move to another Fibonacci level. However some may question the continued bullish trend as it has been in place for a relatively long time. This could be an emotional  statement if solely based on perceived duration. Is there a clue that would point to the change in trend, that is more than a corrective move? 

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We cannot see any in the technical indicators that are used with this chart. The Index still hovers abovethe exponential moving average . When and if it crosses the short one, the red line, it will first point to a small correction as we would normally expect  in a wave 4 pattern. For a trend change the Index must fall below 1710 and before it happens, the technical indicators will yield a different picture. The commentary is not a  recommendation to buy or sell and is intended as educational material only.