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B. Krishnakumar

AFTER a firm start, the American bourses ended the week on a subdued note. In the meeting held last week, the Federal Reserve hinted at the possibility of an interest rate hike in the current year.

This led to concerns about pressure on profitability of the corporate sector on account of rising borrowing cost. As a result, the American stock markets went through a bearish phase. Earlier in the week, the market sentiment was propped up when Goldman Sachs and Procter & Gamble indicated that their profits would exceed expectations.

After logging weekly gains for five weeks in succession, the Dow Jones Industrial Average recorded a weekly drop of 1.7 per cent. The broad based S&P 500 lost 1.5 per cent for the week while the tech-laden Nasdaq Composite Index fell 0.91 per cent.

Given the relatively flat trend last week, the Nasdaq Composite Index continues to be in the midst of a crucial phase. In the near term, the index could see a positive trend. The price action last week has not negated the possibility of a further uptrend in the Nasdaq Composite Index.

Such a view would hold ground as long as the index stays above 1700. A move past 1950 could help the index touch 2100. And a break above 2100 would push the index towards the 2500-2600 range. In any case, in the longer time frame, the index is likely to test the September low of 1357.

(Note : The analysis and opinion expressed in this column is based on the technical analysis of the past price behaviour. Analysis and price targets are based on Elliott Wave and Point & Figure techniques. There is a risk of loss in trading)

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