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Mid Week Market Analysis

(1/5/05)

Suffice to say 2005 hasn't started out well as the major averages have sold off accompanied by strong volume.  The Dow has fallen back to its 23.6% Retracement Level (calculated from the late October low to the December high) near 10600.  If the Dow fails to hold support near 10600 then its next support area would either be at its 50 Day EMA (blue line) around 10530 or near 10400 which is where its 38.2% Retracement Level and 100 Day EMA (green line) come into play at.

The Nasdaq is at a key short term support area just below 2100 which coincides with its 50 Day EMA (blue line) and 23.6% Retracement Level (calculated from the August low to its December high).  If the Nasdaq fails to hold support near 2090 then its next area of support would be in the 2025 to 2040 range which coincides with its 38.2% Retracement Level and 100 Day EMA (green line).

The S&P 500 is also close to a key short term support area near 1180 which coincides with its 23.6% Retracement Level (calculated form the August low to the December high) and 50 Day EMA (blue line).  If the S&P 500 fails to hold support near 1180 then its next area of support would be around 1160 which coincides with its 38.2% Retracement Level and 100 Day EMA (green line).  

At this point the question is have the major averages completed their final upward moving wave to complete an Elliot Wave 5 Wave Pattern or is the recent action just a normal correction to clear the way for an eventual move higher?

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