Sunday, March 08, 2009

Weekly Stock Commentary: Room to fall

With the indices falling off a cliff suggesting a bottom is an impossible task. Taking measured move targets as a guide put the S&P down at 500, the Nasdaq at 400 and the Nasdaq 100 at 300. Although the S&P target does not sound unreasonable, the tech targets sound extreme - especially given their relative strong performance.

A proportion decline as the measured target gives a little more reasonable outcome; the S&P lands at around 500, but the Nasdaq comes in at 900 (and the Nasdaq 100 at 675). Whether these levels are reached will depend on the current mood, but given the market was prepared to give the jobs data a chance before Apple spoiled the party suggests an end (but not 'the end') is close to hand.

Breadth indicators point towards further declines, technicals of the Bullish Percents and Summation Indices have plenty of downside room

Prepare for a counter-rally, but it's unlikely to last anything longer than a few days.

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