Index Overview

Mar 3, 2008: 11:57 AM CST

Let’s take a brief look at where we are as we start the new week, which may see a break of the recent consolidation pattern we’ve been experiencing.

In the Dow Jones, an ascending triangle is forming, which could hint at a larger breakout volatility move is ahead. Consolidation patterns imply balance and relative indecision in the struggle between the bulls and the bears.

The momentum oscillator has broken out to the downside from its consolidation pattern (trendlines), but price has yet to confirm this break, dipping beneath the line this morning but coming back in. Let’s see how price closes this afternoon.

The NASDAQ Index shows a potentially grim outlook:

The NASDAQ appears to have broken out of its symmetrical triangle. Notice the five-wave correction that has taken place. Corrections can take place either by retracing the previous swing, or by traversing in a ‘line,’ or a ‘correction by time’ instead of price.

While I’m not an Elliott Wave Theorist, one has to ask if we are about to start an Impulse Wave Five Down at the break of this sideways line (or symmetrical triangle):

I’d like to hear the insights of any Elliottician if you’re willing to share your thoughts.

Either way, it’s probably best to be on guard this week and next week, and plan to hedge against, or profit from, a large volatility move down (or up!).

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3 Responses to “Index Overview”

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