Analysis of US Indices, October 2014
What is perceived as a possible correction of the indices is in fact a third test of the Fibonacci Fan after the resistance tests of July 2013 and February 2014.
Resistant points of 4300 on the Nasdaq Composite and 1900 on the S&P 500 are robust and could lead to accelerated correction if they break out.
Three scenarios are built. A critical point at 1800 on the S&P 500 and 4000 on the Nasdaq Composite are identified. These critical points need to be crossed with a downward acceleration; otherwise they will offer resistance and a possible upward jump.
If those levels are broken, new resistance will be around 1550 on S&P 500 and 3500/3600 on NASDAQ Composite.
On the contrary, a bullish scenario would imply to cross upward resistance of 4500 on NASDAQ Composite and 2000 on S&P 500.
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