The S&P 500 ($INX) remains in a major (long-term) 5-wave uptrend despite the lower close to December. The secondary (intermediate-term) downtrend looks to be Wave 2 of the major pattern, with a downside target area between 3,796.05 and 3,692.53. Wave 2 could possibly extend to 3,613.37. Based on a Benjamin Franklin Fish Similarity (Like guests and fish, markets start to stink after three months of moving against the major trend) the $INX could remain under pressure through February. Theoretical Positions: Long from the October close of 3,871.98 with a stop below the October low of 3,491.58.
The Dow Jones Industrial Average ($DOWI) also remains in a major 5-wave uptrend, but has also seen a secondary 3-wave downtrend develop. The downside target area is between 31,686.61 and 30,657.88, with a possible extension to 29,871.21. Theoretical Positions: Long from at least the October settlement of 32,732.95 if not the breakout of the September high at 32,504.04.
The Nasdaq ($NASX) extended its major uptrend to a high of 11,567.47 during December before collapsing. The secondary downtrend, Wave 2 of the 5-wave major pattern, has seen the $NASX retrace more than 80% of Wave 1. Given this, the $NASX could see renewed buying interest develop. Theoretical Positions: Long from the October close of 10,988.15 with a stop below the October low of 10,092.94.
The US 10-year T-note (ZN) still looks to be in the process of confirming a major 5-wave uptrend. December saw the nearby futures contract extend the recent rally to a high of 115-025 before falling back to close at 112-095. Secondary support is between 111-069 and 110-025. Theoretical Positions: It’s possible longs might’ve been established at the November close of 113-070 based on monthly stochastics and a possible 2-month reversal. If so, stops would be placed below the October low of 108.265.
