The recovery is in progress and today I want to measure how far we have come in the stock market recovery based on five indices. As we close into the year end I trotted out the weeklies to take a milestone measurement to see exactly where we relative to each index. I have used two markers off each chart. Each index made a resemblance of a head-and-shoulders pattern around the March 9th lows. Using my crayons I plotted the head and shoulders target for each of the five indices. In addition there is also a marker on most indices that align on most charts and coincide with the Summer 06 lows and the Summer 08 lows. So these have been measured on each chart also and called the summer resistance level.
Here is a brief review of each of the charts
DOW – 30
The Dow is about 2.71 percent away from its summer resistance levels and over 7% away from fulfilling its head and shoulders pattern.
SP-500 Targets
The S&P500 targets for the summer resistance line and the head and shoulders pattern are identical and show another 8.5% push to achieve targets. That would put a goal of 1240 on the $SPX.
Nasdaq Composite
The Nasdaq composite has now made its objectives. The question remains will it continue as strong or is the party over for now with the Nasdaq while we rotate into other sectors.
NYSE Composite
Like the Dow, the NYSE composite still has some potential climbing to return to its summer resistance levels and fulfill its head and shoulders requirement. The NYSE and Nasdaq composite’s summer resistance and head and shoulders target are at the same effective level which for the NYSE is still a good 8 to 9% away with a target for around 7920.
Russell 3000 – Rut
On the RUT the summer resistance levels do not line up as well as on some of the other charts. Plotting them off the summer of 08 gives us a target of 2.34% away while the head and shoulders target is still almost 7% away.
Overview of indices and distance to their targets
|
Symbol |
Summer % |
H&S % |
Summer Tgt |
H&S TGT |
|
Dow-30 |
2.71% |
7.07% |
10807 |
11285 |
|
SP500 |
8.58% |
8.58% |
1230 |
1230 |
|
Nasdaq |
0% |
0% |
2202 |
2277 |
|
NYSE |
8.75% |
8.75% |
7920 |
7920 |
|
Rut |
2.43% |
6.83% |
650 |
680 |
The strength has been in technology and the Nasdaq and the N100 and Composite have already covered the distance to complete both its head and shoulder pattern and to pass through the summer of 2008 and 2006 resistance. It is the NYSE and the SPX that are lagging behind these two benchmarks, it is also interesting to note that both of the laggards had identical head and shoulder goals and the summer resistance targets. The DOW and RUT are currently in the middle of that pack.
At some point these will regroup so shorting the Nasdaq while going long the SPX seems reasonable. I will spend some time in the SPX finding the sectors that need to rally to get the SPX into it goals range over the next week. For now we have some upside targets should this bull continue to run.
-Marlin
