It is a near certainty that the recent correction in the stock market is over. We do not necessarily believe that the move from here will be straight up and match the volatility that was present during the recent fall, but we can pretty comfortably state that the low of this decline has already happened.

The blue Fibonacci lines were used in the previous commentary to show a possible downside target for the NASDAQ Composite. You can see that the target of 2433 was hit and broken (but only intraday) and our 2400 support area was hit just for a second before the index rebounded powerfully. This suggests to us that the correction is likely over. The purple downtrend line shows the next resistance level, in addition to the horizontal resistance shown on the chart (2575).  A break of both of these resistance areas should bring the index to the upper resistance lines and confirm that the correction is absolutely over. Any short-term pullbacks in that process should not hurt our view that the long-term uptrend has resumed.

We have shown the same Fibonacci lines and support levels on our chart of the S&P 500. The Fibonacci projected target of 1390 was broken and the index found support on the powerful area of 1380. In addition, we have shown the trend channel on this chart. You can see how the index broke below the lower trendline before coming back into the channel. This commonly signals the end of the decline.  A break above the 50 day moving average should confirm that the correction is over.

We have used the Fibonacci retracements differently on our chart of the Russell 2000. Here, it shows the height of the recent fall. A sustained break above 810 (61.8% retracement level) and the 50 day moving average should confirm that the bottom is in.