The technology bubble was unprecedented in the stock markets worldwide. The upward rally in late 1999 and early 2000 stretched to unimaginable heights accompanied hysteric buying. The fall that ensued has also been one of the most traumatic ever.

Can we take the top of 5132.52 in the NASDAQ as the completion of the first wave in a long-term cycle and the correction ever since as the second wave in motion? If we take this as the right count, then the third wave should once more take the NASDAQ beyond 5000. This seems highly unlikely in the light of the losses being booked by the companies in the TMT sector. It is now clear that a 100% growth in earnings and profits for the next five year is out of question. Many of these companies are struggling to just keep out of the red. We need the investors worldwide to suffer a collective amnesia if these stocks have to touch their early 2000 levels again.

What seems more likely is that once the fall from 5132 completes itself, this index will move sideways in the lower range for many years. For the time being, we will confine ourselves to studying the downward move from the top of 5132.52 (10-03-00). The index has made three major waves between 5132.52 to 1619.58 (06-04-01). It is a 5-3-5 formation. In other words a zigzag seems to be complete at 1619.58.

The revival since the low of 1619.58 does not seem very encouraging. It is definitely a corrective wave and not an upward moving impulse wave. The B wave or the second part of the upward move from 1619.58 seems to be in progress now. 61.8% retracement of the move from 1619.58 to 2328 falls at 1890. As long as the NASDAQ hovers around this area, the bulls can continue to hope. Hope that the C wave up takes the NASDAQ to 2200 or 2500 once more.

We have been waiting for the upward rally from 1387 to mature and the reaction to set in for some time now. Yesterday, the NASDAQ formed a giant engulfing candle with a shaven head. This could be the end of the upward move from 1387. A halt above 1520 there will give rise to an intermediate term up trend that will last for a few months.

The most important factor was the halt in the fall in the US. The NASDAQ gained 76.21 points yesterday to close at 1499. An island reversal has taken place in the daily charts. But, we need to see this rally sustain for a few more days. Resistance for the NASDAQ exist at 1516 and then at 1596. Reaction from these levels will make the index move in a range between 1300 to 1600 for a while. The closing of the gap between 1629 and 1669 should be the first requisite for a medium term trend.

The US markets plunged lower yesterday but some last minute buying saw the prices recover substantially. However, the weakness there is bound to continue for some time. The NASDAQ formed a gap between 1669 and 1629 on Monday. Closing of this gap will be the first requisite for a sustained up ward move. A rally above 1750 will mean that a medium term up trend is underway. Till such time, it is best to tread carefully in the TMT stocks.

The US markets slid once more yesterday and that is a cause for worry for our TMT stocks. We had mentioned last time that failure to rally above 1925 by the NASDAQ will have bearish implication. The NASDAQ touched a high of 1933 and has been sliding ever since. The important support around 1850 is now broken. The larger target for this wave down was 1859, 1709 and then 1466. There is a chance of a bounce from around the April low of 1619 as the index rises once more to form a flat pattern.

The fall since the top of 2328.05 (22-05-01) is a vicious down trend. We have series of lower peaks and troughs forming an intermediate term down trend. The short-term trend has been down since the top of 2102.53 (02-08-01). This down trend has the immediate target of 1882, 1811 and then 1695. In case we have a short-term recovery, we need to see a close above 2000 before it can be taken seriously. Till this happens, it is best to avoid fresh long positions.

The DJIA has been in a multi-year bull market over the past decade. We saw this bull market halting at an all time high of 11908.50 in January 2000. Since then this index has been in correction that has made it oscillate mainly in the zone between 9500 and 11500. Since this period of correction follows many year of upward movement, it can last for a few years more.

The long-term trend is sideways, the intermediate term trend is down since 11436 and the medium term trend is once again sideways. One long-term flat correction could be complete between 11908.50 and 9047.56 (23-03-01). The rise to 11436.42 (25-05-01) can be an X wave. So we will have another three-wave correction unfolding now from the top of 11436.42.

The after-effects of the bombing of the WTC and the Pentagon has seen the DJIA plunge in to an abyss. This plunge downward seems to be the third wave down from the top od 11510 (11-07-01). The targets for this third wave fall at 8411 and then at 7111.60.

If we consider the downward move from the top of 10515, the third part of this wave or the most ferocious and destructive part seems complete at Friday's low of 7850. The target of the fourth wave fall at 8378, 8740 and then 9080. Failure on the part of the current rally to rise above 8704 will underline the bearish undertone in this index.

A likely scenario for the medium term is sideways movement between 7000 to 9000 for a few more weeks.

The DJIA index is moving sideways between 10500 and 10000 in the medium term. This looks like the fourth wave from the top of 11436. The targets of the fifth wave downward are 10203, 10000 and then 9762. A sharp fall below 9762 will take this index to 9143. The formation of a descending triangle in the daily chart is another indication that the downward move from 11436 is quite likely to resume.