Nasdaq 100:
2584.78
Short-Term Trend: Downtrend
Outlook: Well, our bearish outlook and strategy (that we have held for several weeks) has been completely justified with last week's strong move down. Now, the daily chart remains as bearish as before and one can expect further losses as long as the prices stay below 2650. However, the fact that the move down from the September top is well contained within a channel tells me this move is corrective. And that means that we still cannot confirm the completion of wave (Z) from the December 2011 low. So, a strong counter-trend rally may develop soon.
With the huge profit that we have now (more than 200 points), it makes sense to take profits here.
Strategy: We are long from 2797 and we favor now taking profits here.
S&P 500
S&P500: 1382.57
Short-Term Trend: Downtrend
Outlook: In line with my expectations S&P500 declined sharply last week. Now we have two alsmost equaly likely scenarios. The first scenario suggests that S&P500 has already topped out and wave (Z) is complete. In this case, we can expect further lossses in the coming weeks toward 1280/70 area. The second scenario suggests that wave (Z) from the December 2011 low is still incomplete (wave (Z) is taking the form of a Triangle) and in that case we may soon experience a strong rally back toward 1454 level.
Therefore, while the immediate trend is down, there are strong reasons to expect a counter-trend rally for several weeks. For that reason, I favor staying on the sidelines for now.
Strategy: Stand aside.