As we said, rallies that occur on poor internals tend to fail, and this one was no exception. Now the question is, how low will the market go? If we look for measured moves off the recent highs duplicating the downtrends earlier this month, we come up with targets of 1953 on the Nasdaq (first chart below), 1111 on the S&P (second chart), and 10,217 on the Dow (third chart), but first the market would have to break the recent lows of 1973 on the Nasdaq, 1116 on the S&P, and 10,250 on the Dow. The Nasdaq faces resistance at 2000-2007, and support is 1967-1973, 1953 and 1930-1940. The S&P has support at 1116, 1110-1111 and 1098-1102, and resistance is 1126 and 1132-1135. The Dow has support at 10,322-10,333, 10,300, 10,250 and 10,217, and resistance is 10,400-10,410 and 10,500. Tomorrow’s GDP report – or rather, the market’s reaction to it – will have much to do with the market’s next move. The report is likely to be strong – analysts are looking for 5% growth in the first quarter – so the market’s direction will depend on whether investors are happy to see strong growth or worried about inflation and rising interest rates.
