Monthly chart for S&P
Monthly chart for NASDAQ
On monthly charts, it seems that Dow and S&P had failed the 50 month moving average and have just tested support at the 200 month moving average for the last 2 months. (green line) NASDAQ is the most “bullish” of the indexes, as it is did not drop as much as the other 2 indexes. However I feel that the July low is still not it and we should be breaking that low to form a wave 3 down to around 900 on the S&P.
Weekly chart for Dow
Weekly chart for S&P
Weekly chart for NASDAQ
I believe weekly charts are the most bearish of all the time frames. All 3 indexes made a bearish engulfing candlestick pattern in the first 2 weeks of August. This pattern is usually followed by a retracement of not more than 50% which is what happened last week. This candlestick signal together with the breaking of the 50 day moving average is a very bearish signal for the markets. We should be following through this downward movement over the next few weeks. I’m expecting the S&P to drop to 900 by the end of the year.
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