Commentary

September 2007 Commentary

After a long rest, we are back to business looking at the NASDAQ 100 Index. Our perspective will be from a longer term as we will look at 4 years data. What is striking us at first is the the upward path of the price over these years. It is a nice opportunity to check how the Fibonacci retracements work out. On the two instances examined, the 75% retracement is the closest and this is not usually the most common. We can see it in wave 2 correction although we are looking at fifth wave extensions. The next interesting thing is the last portion of the chart where we observe a much bigger move. Is this the end of the bullish pattern? We have had two extensions already, what would justify a third one? From a technical analysis standpoint, we have to look with the tools available. In this case, are we near a projection level either short or long term?

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We leave it to the reader to find an answer these questions. We will add that from an Elliott perspective, there is an 8% third wave taking place and if price moves above 2060, there will be another bullish move hence a third extension. For this to happen, we need momentum and fuel from an economic standpoint. It may not look like this at the moment, yet it may happen. If instead, price drops below 1800 we are in for a nice correction to be followed by some consolidation.