Weekend Analysis for July 22, 2006

Historically most major market bottoms have occurred in the late Fall so we still may have a ways to go before a true bottom occurs. It's possible that the Nasdaq will eventually drop back to one of its its longer term Retracement Levels (38.2%, 50% or 61.8%) calculated from the Fall 2002 low before we see a major bottom occur. Currently the 38.2% Retracement Level is around 1900 which also corresponds to the April 2005 low (point A). Meanwhile the 50% Retracement Level is around 1750 which is very close to the August low of 2004 (point B). Finally the worst case scenario would be for the Nasdaq to drop back to its 61.8% Retreacement Level which is at 1600. Meanwhile until a true bottom is reached look for any oversold rally to encounter strong resistance at the Nasdaq's 40 Weekly EMA (blue line) which is currently around 2200.















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