Catching the Wave: Euro Bounce Ending

"Earnings are higher, and interest rates are lower now than they were at the 2007 high," said an investment firm analyst on CNBC late Tuesday. "The Dow and S&P 500 are having their best February since 1998, and the Nasdaq since 2000," said another.

Both of the above statements are true and are similar to metrics that were cited during past points of peaking prices. One thing not mentioned lately is that Treasury bills have outperformed the S&P 500 since 1999 on a total return basis, with zero principal risk. Another item that market participants choose to ignore is that if you had $1 million dollars invested in the Nasdaq in 1999 and held it all through the past 12 years, you're still missing $500,000 of your net worth.

Nasdaq Source: eSignal View Chart » View in New Window »

The chart above, however, suggests that, at current levels, more risk-on trading should be done. I've noted two price levels that provide Elliott Wave Theory/Fibonacci targets for an end to the rise in the Nasdaq from 2008 (and perhaps 2002) -- namely, 2740 and 2770, which are very close to current levels and just below the Fibonacci 50% retracement line at 2805. After the 2458 level was broken in January, they became the next target for the pattern's termination. Once these levels are tested, 1800 is the minimum correction target for the coming decline, which is the lower channel line in pink. The big turn window I outlined yesterday for mid-March would work well for a top with this price target of 2770 (give or take 40 points)....131 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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