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Will 50 Percent Fibonacci Level Mark Nasdaq Inflection Point?

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Plus, take note of the Semiconductor Index and its effect on the market.

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In 2012, we were reminded of the magnitude of the NASDAQ Composite (INDEXNASDAQ:.IXIC) decline during the 2000-2002 bear market. In March 2012, the index rallied to the 50 percent retracement level of the aforesaid bear market before falling into a correction. In September 2012 and October 2012, the index revisited the 50 percent retracement, but failed again to hold this key technical level, thus highlighting the potential for a Nasdaq inflection point.

Heading into 2013, I see three clear options for the NASDAQ Composite:
  1. The index could finally push above the 50 percent retracement of the 2000-2002 bear market and the 1983 trendline.
  2. The index could confirm a double top and Nasdaq inflection point by trading below 2726.68 (the June 2012 low). This would set up the potential for a decline to the 1978 trendline where it found support in 2010 and 2011.
  3. Lastly, it could trade sideways with a slight downward bias, also confirmation of a Nasdaq inflection point.

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We should not overlook the Semiconductor Index (INDEXNASDAQ:SOX) and its importance to the outlook of the technology sector. The SOX has traded in a 100-point range since printing a high in February 2012. It has constantly found support at the 200-week simple moving average, but each bounce from the key long-term moving average has made a lower high. This needs to change if the NASDAQ is going to continue the 2009 bull market.


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This article by Sheldon McIntyre was originally published on See It Market.
No positions in stocks mentioned.
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