Weak trend to persist

B. Krishnakumar

THE stock market sentiment turned weak during the earlier part of the week. The bearish sentiment was, however, reversed on the amicable settlement of the anti-trust case against software giant Microsoft.

As a result, the Nasdaq Composite Index managed to erase part of the earlier loss in the last few days. The economic data released during the week did not, however, portray a positive picture of the economic health.

The next event to look forward to is the meeting of the US Federal Reserve scheduled on Tuesday. The market expectation is that the Fed would cut interest rate by 50 basis points during its Tuesday meeting.

The Nasdaq Composite Index ruled weak in line with last week's expectations. The near-term outlook for the index continues to remain bearish. As of now, the index could test the 1600-1620 level before resuming its recent uptrend.

As iterated in earlier weeks, there is a case for the Nasdaq Composite Index to have completed the recent run-up in price. However, there is no indication to suggest the termination of recent uptrend in daily charts.

A close past the earlier high of 1800 would push the Nasdaq Composite index to higher levels of THE 1900-1930 range. As mentioned in the earlier weeks, the on-going rally is still to be viewed as correction to the overall bearish trend and a retest of 1380 level is still on.

(Note : The analysis and opinion expressed in this column is based on the technical analysis of the past price behaviour. Analysis and price targets are based on Elliott Wave and Point & Figure techniques. There is a risk of loss in trading)