The NDX daily chart suggests we have to drop briefly below 1500 and the support below that support is 1440. In wave magnitude, the first wave down was 570 points and for the current wave that brings us to 1490. The TDM Combo count has a 12 waiting to be completed by a 13 and that will somehow mark a low - question is for how long. The weekly counts still gives some time for a low (3-4 weeks). That gives us the same position as the VIX did for 2 scenarios with the same bottom-line. The House approves a bailout and we get initially a rally, which is sold again and we go down to 1440 even1350 (61.8% retracement) is possible. What I do not like was the break below 1600 NDX and that we remain below and at the same time monthly MACD crosses the 0 line. The 1520 represents the 50% retracement level and 1500 a channel support. The other less likely scenario is the house says 'No' again and we drop again 6-8 % and we get coordinated rate cuts to turn it around. The ECB's chairman Trichet said very clearly today if necessary anytime, anyplace and the FED is also signaling a rate cut is due soon. In any case, we get a spike low soon only the magnitude might differ. The credit market is even much tighter today and the central banks are waiting for the Congress to go ahead before they will act. The EU is having an emergency conference this WE to discuss a similar package of $450 bil. Tomorrow we will dip briefly below 1500 NDX and SPX test the 1110 the risk is that they lose another 5-8 % next week before a short covering rally might be triggered if Congress votes again Nay.
Thursday, October 2, 2008
NDX technical update - at the brink of a wild trough
The NDX daily chart suggests we have to drop briefly below 1500 and the support below that support is 1440. In wave magnitude, the first wave down was 570 points and for the current wave that brings us to 1490. The TDM Combo count has a 12 waiting to be completed by a 13 and that will somehow mark a low - question is for how long. The weekly counts still gives some time for a low (3-4 weeks). That gives us the same position as the VIX did for 2 scenarios with the same bottom-line. The House approves a bailout and we get initially a rally, which is sold again and we go down to 1440 even1350 (61.8% retracement) is possible. What I do not like was the break below 1600 NDX and that we remain below and at the same time monthly MACD crosses the 0 line. The 1520 represents the 50% retracement level and 1500 a channel support. The other less likely scenario is the house says 'No' again and we drop again 6-8 % and we get coordinated rate cuts to turn it around. The ECB's chairman Trichet said very clearly today if necessary anytime, anyplace and the FED is also signaling a rate cut is due soon. In any case, we get a spike low soon only the magnitude might differ. The credit market is even much tighter today and the central banks are waiting for the Congress to go ahead before they will act. The EU is having an emergency conference this WE to discuss a similar package of $450 bil. Tomorrow we will dip briefly below 1500 NDX and SPX test the 1110 the risk is that they lose another 5-8 % next week before a short covering rally might be triggered if Congress votes again Nay.
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