If NASDAQ 100 Correction Over, 18,000 Should Be Next
Dr. Arnout ter Schure | Dec 23, 2021 03:14PM ET
Over the past several weeks, I had been looking for the Nasdaq 100 to ideally reach as low as $15,135 (+/-5%). (See here.)
On Monday, the index dropped to a low of $15,509, only 2.5% above the ideal target zone. As I always say, "Please remember, my work is ~70% reliable and ~95% accurate. I am not a prophet. Thus, be realistic and do not expect perfection and zero bad calls in a dynamic, stochastic, probabilistic environment. Because all we can do is anticipate, monitor, and adjust if necessary."
Thus, so far, the index dropped within the margins of error. It is now back at the scene of the crime: last week's FED-announcement-reaction-high.
The current multi-day rally suggests that the (red) intermediate wave-iv correction I anticipated weeks ago has most likely been completed. It took the market about a month. Thus, the market has done enough of a correction, both in price and time, to consider it complete. And, as I always say, "In bull markets, downside disappoints and upside surprises." The real low of $15,509 vs. the ideal low of $15,135 is expected because the markets do not have to be flawless all the time. Bottoming within 2.5% of a perfect low is ideal enough already, if I may say so.
Figure 1; NDX100 daily candlestick chart with detailed EWP count and technical indicators.
Figure 1 above shows the updated EWP count, and the red and green dotted arrows indicate the ideal path of what I expect next. In my last update, I mentioned, "It also means the subsequent 5th wave will ideally target the (red) 200.00% extension at $18079." The red dotted arrow exemplifies the way to get there, showing a (red) intermediate wave-v = 0.764x wave-i relationship starting at this week's low and in addition to that targeting exactly the 200.00% Fib-extension. This wave-v will consist of five smaller waves: green (minor) waves 1, 2, 3, 4 and 5 (remember the market is fractal, i.e., self-repeating).
Thus, wave-1 is under way, and wave-2 will soon begin before waves 3, 4, and 5 take hold. Since wave-2 cannot move below the start of wave-1, which is the $15,509 low, it means the NDX must stay above this week's low.
Thus, the NDX came within 2.5% of the ideal downside target I had set forth several weeks ago and launched higher. This week's multi-day rally suggests a more significant 5th wave to ideally $18,080 has started. This 5th wave will consist of five smaller waves. As such, I expect a minor pullback to begin soon, to ideally ~$16,000+/-100, before the successive waves kick in. If this update's ideal roadmap to $18,000 should unfold if the pullback stays above this week's low. That's the "anticipate" part of EWP.
Get The News You Want
Now, I will follow the price to see if that will happen. That is the "monitor" part of the EWP.
Lastly, if the index does drop below that low, or if its price rallies higher than anticipated, I will adapt my EWP count or upside targets. That is the "adjust if necessary" part of the EWP. Ultimately, thanks to the EWP, I now have an if/then scenario in my hands with a precise downside level that needs to hold, i.e., one can use that as a stop loss; and with a clear upside target. Honestly, trading does not get much simpler than this.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.