Dow Jones, S&P and NASDAQ 100

Markets moved down as expected and mentioned in my previous posts. Please read previous posts to understand what I had said before. It is also advisable to read the posts while the charts of major indices are open on your trading platform. This way you can mark the future important numbers mentioned in this post and set up alerts.

Last Friday Dow Jones fell 275 points, S&P 32.29 points, NASDAQ 100 66 points. Dow Jones closed at 12,118.57, S&P closed at 1278 and NASDAQ 100 2458.00

I kept saying that Dow Jones was having hard time in maintaining 12,500 level and the resistance it had was at 12,580. So that is what it did. It tried to break 12,580 couple of times and failed and dropped.

I had mentioned about S&P that it is failing miserably near 1328-1330 level. I had also mentioned about the importance of 1334 number for S&P and 1297. S&P earlier found support at 1297 and bounced off but 1334 was the first resistance which it failed to conquer. Even if 1334 would have been conquered then there was another heavy resistance above near 1340-1344 which it needed to break to make the case for market bottoming out. S&P came to 1334 and pulled back and then dropped 32 points. I had mentioned that 1280 should not be broken and it did and S&P closed at 1278 so more down move is expected in coming days.

I had mentioned that NASDAQ 100 futures telling me that it does not have any strength and we need a break of 2460. On Friday (June 1st) it closed at 2458.83

Dow Jones is expected to fall to 11875-11845 range and could find support at this range. However there is an alternate scenario based on another technique I use to determine support and targets. Based on this technique I find that Dow Jones may find support at 11,965 for the time being which is only 153 points away from the current level. If 11,965 level is broken then Dow Jones will fall to 11,875-11,845 level and may linger at this range for few days or find support and start rising upward. If 11,845 is broken then Dow Jones will fall to 11,575-11,560 range. So this week I will monitor what Dow Jones does in conjunction with other major indices. One must consider all major indices (Dow Jones, S&P and NASDAQ) and come up with the conclusion as to which indices is giving the clue about the next move and in which direction. As sometimes 2 indices indicate that they are finding support whereas one telling us that there is more down move coming. This is exactly happened last week. S&P and NASDAQ 100 were indicating as if they had found support. In the media also they kept talking about 1297 and how 1297 was tested twice and buyers came in and bought their favorite stocks. They were not discussing about Dow Jones. Whereas I was watching Dow Jones for the clue and knew that 12,500-12,580 is the crucial level for Dow Jones and not conquering this level decisively will bring Dow Jones down. So my members and I position ourselves with the bearish trades to capitalize on the coming down move and it paid off handsomely.

With regards to S&P the next support level is 1265 which is 13 points away from the current level. After 1265 I expect S&P to fall immediately to 1259 and if 1250-1245 is broken then S&P could drop to 1215. We will see what S&P does in coming week as there is no use to analyze beyond 1215 because if 1215 is reached then S&P could drop a lot more to 1130.

As last week I was watching Dow Jones for the clue, this coming week I will watch NASDAQ 100 for the clue. The immediate support for NASDAQ 100 is 2438-2440 level. If you look at NASDAQ 100 chart you will see that it had major resistance near 2438-2442 level in July of 2011. So this resistance is now support. If this support is broken then NASDAQ 100 will fall tremendously towards 2384 and probably to 2345 level.

Once my targets are hit I will be watching all three major markets to determine the next move and important support /resistance levels.

For Gold traders it is important to know that it has resistance at 1640-1642. Gold must take out 1642 to continue upward towards 1685 where it will meet another heavy resistance.

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