Where Will the Nasdaq and S&P 500 Mini Crash Stop?


The Nasdaq (^IXIC) has gone from hero to zero in about three days.

There are probably many explanations for the Nasdaq’s temper tantrum. Technical analysis offers the most logical (and duplicatable) reason.

A number of my prior articles encouraged investors to watch upcoming resistance and immediate support. Why?

Just last week the Nasdaq-100 (QQQ) was trading within striking distance of serious double Fibonacci resistance at 3,266 – 3,280 (the October 2 high was 3,256).

In addition, two long-term cycles are projecting a market top for 2013/2014 (more below).

Resistance levels for stocks are like traffic lights for cars. Resistance levels don’t guarantee that stocks will stop and take a u-turn, but – like a traffic light – they are the most likely place for a stop and/or u-turn.

The Nasdaq-100 chart below shows the key Fibonacci resistance and other trend lines we’ve been watching.

View photo


Yesterday the Nasdaq dropped below the upper black trend channel line and the longer-term red trend line just below.

The October 6 Profit Radar Report warned that: “We may be dealing with a bearish rising wedge and a deeper fall. We will go short with a drop below 3,185.”

The corresponding trigger level to go short the S&P 500 (^GSPC) was 1,665.

As the Nasdaq chart above shows, there is no real support near current trade, so lower prices are still likely.

VIX (Chicago Options: ^VIX) seasonality suggests that stocks will rebound soon, but a 13 and 7-year S&P 500 (SPY) cycle suggests that the coming year will be very tough for stocks. A much more detailed forecast is available to subscribers of the Profit Radar Report.

For more details on VIX seasonality click here: VIX Seasonality Near Best Turning Point of the Year

To read the full article about the 13 and 7-year cycles click here: 13-Year S&P 500 Cycles Project Market Top

Simon Maierhofer is the publisher of the Profit Radar Report.

Follow Simon on Twitter @ iSPYETF 

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