In our last update on the NASDAQ Composite [see: Nov 4 Update] we called a top and forecast a drop to the 200-day moving average, then at 14,181.
If this channel holds, then the push past the 3.618 will reverse itself and the index would be susceptible to significant downside. I suspect COMP is going through the same exercise as SPX, DJIA, etc: Don’t tag the SMA200 until it represents a higher low than the last one. In this case, that would be the Oct 4 low of 14181.
As it turned out, we were two weeks and 1.5% early. During those two weeks, the 200-DMA’s rose from 14,210 to 14,661. But, it remains our next downside target – a 9.6% drop rather than the 11.2% one originally anticipated. The bulls had better hope it holds.
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