At the end of February we suggested that March would bring an intra-month spike higher in the Nasdaq 100, and then a rather dramatic reversal. We specifically espoused 4390 as a potential stopping point -- grossly underestimating the power of the speculative froth. What we did not get wrong was that after early March strength, the month would indeed bring a reversal, and the last week of the month generally undid what it had taken three weeks of upside gyrations to accomplish. The month did not end up being a down one in absolute terms, but we did end up leaving a fairly nasty "spike" formation on a monthly basis. Eyeing the overall rhythm of the pattern, and pulling Fibonacci bands down from the high, we still see an intermediate term target here with a handle in the 2000's -- specifically 2865, or therabouts. Coincidentally this is not dramatically different from our original downside target range.

Chart produced using GET End-of-Day

Meanwhile, while there are far more stocks that we dislike other than Microsoft, news has obviously broken on the Microsoft antitrust case over the weekend, and the market is likely to use this as an excuse to trade lower overall. We thus thought it useful to take a shorter term look at Microsoft and see if we could spy a natural target level basis an hourly chart. A price just below $95 fits that bill. We are agnostic on Microsoft longer term, as there are much better candidates to sell that are barely real companies when compared to Microsoft which clearly is. It seems appropriate though that government action breaks the tech mindset and mania, much as exchange rule changes broke the mania in 1980 silver, or exchange rule changes broke the mania in palladium as recently as last month.

Chart produced with GET End-of-Day

Note Bien: The week of April 3 is due as a "panic cycle" week on the models of Princeton Economics, with increased volatility building into the weeks of April 17th and 24th. Armstrong's models could never of course have predicted the exact week that Microsoft would fall from grace...but then maybe fundamental events somehow fit themselves into the market's pre-existing fractal rhythm. Whatever the case, negative fundamental news plus a panic cycle week should not be toyed with. Crash helmets may be appropriate.

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Sand Spring Advisors provides information and analysis from sources and using methods it believes reliable, but cannot accept responsibility for any trading losses that may be incurred as a result of our analysis. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities, and should always trade at a position size level well within their financial condition. Principals of Sand Spring Advisors may carry positions in securities or futures discussed, but as a matter of policy will always so disclose this if it is the case, and will specifically not trade in any described security or futures for a period 5 business days prior to or subsequent to a commentary being released on a given security or futures.