Markets have stayed nervous, and for good reason. The weekend developments in Greece are causing big moves in world markets today. Will this push the US markets out of the sideways range they have occupied for months? Maybe. Let’s have a look at the situation in the Nasdaq (click image to enlarge it):
The market turned down in the middle of the week and is about to test the support near 5000 again. A drop below this level would violate the weak up trend that is in place since the start of the year. A drop to 4800 becomes likely in that case. We remain in a lunar red period, so a further drop is certainly not out of the question.
Technically we still have a very uncertain and mixed picture. The Earl (blue line) and the MoM indicator are going down, but the slower Earl2 has quietly turned up from another shallow bottom. That doesn’t help us much. As I have been pointing out in my weekly outlook for months, we have to remain cautious until a clear direction emerges.
The month is not over yet, but some people are asking for the next LT wave already. By the middle of Jue a reader wrote me to tell how terrible the LT wave was doing. But now a few weeks later it doesn’t look that bad at all. People just shouldn’t expect perfection. The LT wave doesn’t work all the time, but it seems to work more often than not. Here is the LT wave for July, also showing how it did for June (click image to enlarge it):
Last month we called for a weak start with a really strong period starting around the 15th and renewed weakness in the final days of the month. That is exactly what we got.
For July the LT wave projects continued weakness until the 4th, followed by a strong period that stretches until the 24th. The final week of July looks weaker again.