Stock Market Commentary: Follow the leader down

The past few days has the look and feel of a parabolic move down. It would appear the indices are following the lead of the Dow down.

The point-n-figure chart has a target of 7,050 but a weekly chart sees little room for maneuver until 6,443 (then 5,503 and 4,061). The weekly chart clearly shows how the current decline is all about 'blue-chip' stocks - the Dow having emerged relatively unscathed from the 2000/02 decline.

If there is a sliver of hope it's that Tech has weathered the meltdown relatively well. If only because 2002 lows are more or less where the Nasdaq was in 1996 and the index has yet to test these. Psychologically, a 1,000 Nasdaq is a big area to defend.

As for the short term, keep an eye on Richard Lehman's Trend Channels; these appear to be acclerating to the downside.

Dr. Declan Fallon, Senior Market Technician, the free stock alerts, market alerts and stock charts website

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