Recall that last week in my 'After Further Review' piece, I introduced 'T' theory and the method for measuring how long rallies or periods of market strength will last.  The date that was projected off of the NASDAQ 'T' was August 8.  I also recommended a pair trade to exploit out performance by the Russell 2000, using the S&P 500 as the inverse position to take advantage of that disparity without taking on 'naked long' market risk.  Now I am going to show where we are in these periods of strength and show that an alternative method of time measurement - Fibonacci time cycles is corroborating the 'T' theory projection.  In technical analysis, always use a 'weight of the evidence' approach.  When different methods paint the same picture, that increases the odds of a correct market call.  Below is a chart of the NASDAQ Composite which shows time cycles measured off of past swings clustering together in the Aug 5 - 7 range with resistance overhead in the 2360 - 2400 area, based on price retracements and extensions.  There is another formidable resistance area which falls between the declining 50 and 200 day simple moving averages.  These moving averages are typically used by major players to either initiate or take off positions.  In this case, encountering this range should bring in fresh short selling.  The resistance range between the moving averages is 2385 for the 50 day up to 2460 for the 200 day.  Looking at the two resistance ranges (2360 - 2400 or price retracements and 2385 and 2460 for the moving averages), we have overlap in the 2385 - 2400 range which makes this a higher probablilty price target.  So we will look for this period of strength to last until August 5 - 8 and run into solid resistance in the 2385 - 2400 area.   See the NASDAQ chart below (if you can):



The Russell 2000 is also showing a similar picture.  Fibonacci time cycle measurements have produced a nice cluster dead on August 7 with solid resistance in the 717 - 738 range.  The simple 50 and 200 day moving averages also come into play here in the 714 - 729 range.  That gives us a 'resistance overlap' of 717 - 729.  The Russell closed on Friday at 710.  That means that the Russell will either bust through resistance and assert itself as a true leader or it will find itself hitting what amounts to a brick wall of resistance which will hold it in check until the 'positive time frame' calculated off of the NASDAQ 'T' (August 8) expires.  See the Russell 2000 chart below:

 

Again - we are in a bear market until proven otherwise.  This analysis is simply to look for the beginning of the next leg down.  Bear markets are notoriously unpredictable and can take the next 'swipe' at any time.  However, should these upside resistance levels be taken out convincingly, the market will be telling us that a bottom of some duration may be in.  Right now continue to play it close to the vest.  Wall Street is littered with the financial remains of those who tried to be heroes by picking bottoms in brutal bear markets.  The way this market rallies sharply on questionable news and government intervention says that psychology is not yet ready to allow a bottom to form.   At the very least, expect a test of the July lows as this market is by no means out of the woods yet.