Investors’ resilience got tested again last week as stocks had some significant down days. The up trends in major indexes are not broken, but there is certainly reason to be cautious as I have been warning in my daily reversal levels posts and on Twitter. Here is the current Nasdaq chart:
All indicators are pointing down now and the Nasdaq may go for a test of the 6000 level before we see any signs of a tradeable bottom. We are in a new lunar red period and how the market gets through this period will probably be quite important. If stocks can muddle through without causing damage to the longer term up trend then another rally in late July/August would become the base scenario. A move back above 6300 would tell us that rally is on.
A sustained drop below 6000 would suggest we are in a more serious decline and then 5400 would become an initial target.
Our LT wave for June did a mediocre job. Here is the expected pattern for July:
Strength in the first days of June was followed by a sideways in the expected weak period, but projected strength in the final week of the month did not materialize in a convincing way.
The wave for July projects ongoing weakness until the 20th followed by a stronger week. Lowest wave values come on the 8th and the 14th with highest values expected around the 26th.