Weekend Market Analysis for June 3, 2006

The Nasdaq has rallied just over 100 points since making a short term bottom seven trading days ago and has risen back to its 200 Day EMA (green line) near 2230. At this point one of two things may occur with the Nasdaq in the short term. The first scenario would be for the Nasdaq to rise above its 200 Day EMA leading to a move up to its 50 Day EMA (blue line) near 2260 which is its next level of resistance above 2230. Meanwhile the second scenario would be for the Nasdaq to stall out near its 200 Day EMA and then come under more selling pressure leading to an eventual retest of its low made just over a week ago near 2135.

Meanwhile if we look at a longer term chart of the Nasdaq the 2135 level is a critical support area for the Nasdaq as it corresponds to its 38.2% Retracement Level (calculated from the August 2004 low to its most recent high) and also is along its upward sloping trend line (brown line) originating from the August 2004 low. If the Nasdaq were to fall below the 2135 level then its next area of support would either be at its 50% Retracement Level near 2060 or at its October 2005 low near 2030. Thus it will be very important for the Nasdaq to hold support near the 2135 level in the weeks ahead to keep its longer term upward bias intact.



To read our complete Weekend Analysis you can click on the link below.

http://www.amateur-investor.net/Weekend_Market_Analysis_June_3_06.htm