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I'd like to share some analysis I did on the Nasdaq index. I'm curious if
anyone else is seeing a sharp downswing into the Oct 24 - 31 timeframe?
It's a bit difficult to describe all the tools and principles used in this
analysis, but fractal analysis, triangle resolution, and Andrews Median Lines
(similar to Dynamic Gann Levels [DGL's] - L2) play a large part in
this study... in addition to cycle principles.
Note the similarity in each of the three fractals. Fractal #3 (not yet
completed) is on a track to be exactly half of Fractal #1 (in both time and
price). As a result, I expect Fractal #3 will complete in the red target
box next week - to fulfill the shape of Fractals #1 and #2. The ideal target
date for a Fractal #3 bottom is Oct 28 as this will be 128 trading days from the
beginning of the fractal and exactly half of the 256 days in Fractal #1. The
downswing may take another day, or so, (for a variety of reasons)... so...
the bottom may also occur on Oct 31st.
Observe the bounce downward off of the Andrews resistance line on
Thursday Oct 20th. This line also represents a 50%
retrace from the peak of Oct 4th... so... it's no surprise that resistance held
at the 2096 level. (Now... this could just as easily have been a DGL level, but
pegging the center DGL point to the close of Pivot A does not always work
as accurately desired. Andrews just happened to work better here).
Note the heavy red support line originating in 2001 (over four years
old!!!). There are four reasonably significant pivots establishing this
line. I suspect that any genuine break of this line will
trigger additional and substantial movement to the downside. The
index could easily break this line considering the medium cycle downswing
in progress... and an apparent larger cycle downswing on the verge of
being positively confirmed.
I strongly suspect the index will enter the red box next week. If price
significantly violates the red support line, I don't think a mini-crash, or
outright crash, is out of the question. I'd give it better than 50-50 odds in
such a case. My primary targets for the index (as reflected in the following
support levels) are 1,960, 1,868, and 1,726. It's a lot of ground to cover
in six trading days considering Friday's close at 2,082.21.
In the following support and resistance levels, any significant violation
of support will likely cause the index to drop to the next lower support
level.
Good trading,
Andre
Nasdaq Support and Resistance Levels to Oct 31,
2005
October 23, 2005
Nasdaq Close on 10-21-2005 -
2082.21
Resistance Levels for Oct 24,
2005
Highest expected high for Oct 24th 2085 (2084.76 to 2085.60) (strong
resistance)
Support Levels
through Oct 31, 2005
(support becomes resistance as the index falls)
1st level 2074.20 (significant)
2nd level 2068 (2067.51 to 2068.14) (minor)
3rd level 2054.67 (significant)
4th level 2042 (2040.78 to 2042.03) (significant)
5th level 2025.58 (large significance)
6th level 2016.77 (significant) (enters target zone likely
to continue down)
7th level 1971.50 to 1968.50 (very significant 4 year
support line)
8th level 1960 (1953.5 to 1960.0) (very significant - beyond
normal 100% target extended drop likely
9th level 1938.47 (very significant last support before a
significant crash)
10th level 1,867.61 (very significant expected 162% target
major support if broken)
11th level 1,798.50 (significant 38.2% retrace from 2002
bottom)
12th level 1,755 (some support minor?)
13th level 1,726 (1,713 to 1,726) 262%
target
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