Stock Market Forecast
Our leap day forecast starts with an analysis of the NASDAQ Index (ND).
Summary: The NASDAQ index is likely in a topping phase for this recent move. Angular momentum is finally waning (see trend line drawn off highs on the market analysis chart below) and Fibonacci extensions have a confluence of resistance levels here and slightly higher. All bets are off if the upper trend line is exceeded on the upside.
The ND is at the 2.38% extension level from the move that occurred from the October 25th low to the December 5th high, and at a 1.618 price extension from the move that occurred from October 4, 2011, until October 27th. Moreover, at a slightly higher level of 2647, the NASDAQ would reach 320% of the last significant corrective move from the high of December 5, 2011 high to the low of December 19th, which is often a place where extended moves pause or reverse for a while.
RECOMMENDATION: Look for a top of this move between now and the first week of March, or possibly until March 15th, between the high on 02/28 to a possible level of 2647. Then, we should experience a correction into May, with a likely bounce into the June 24th time area. From there, it remains to be seen if we will see another correction with a final rally into around March 2013, or this year's high will be all she wrote. Stay tuned.
Potential Reversals in the FX Market
In the FX market, also look for potential reversals in various currency pairs between now and March 7th or March 15. See our 02-28-12 Analysis. Make sure to also visit the Forecast section of our blog for frequent market updates and currency analysis.
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