NASDAQ 100: Was That All The Correction We Got?
Dr. Arnout ter Schure | Dec 08, 2021 02:59PM ET
Two weeks ago, after the NASDAQ 100 topped close to the ideal ~$17,000 target, I presented the option using the Elliott Wave Principle (EWP) for the index to correct 10-15%. Fast forward, and the NDX bottomed at $15,543 on Dec. 3 – a 7.4% correction.
Meanwhile, the Russel 2000 did not fare any better as it suffered a ~13% correction. Thus, the question is: Is that “all she wrote?” Let’s have a look at the daily chart.
Figure 1: NDX100 daily candlestick chart with detailed EWP count and technical indicators.
So far, the index has reached all the ideal Fibonacci-based extensions and retrace levels for various degrees of 2nd, 3rd, 4th, and 5th waves. Thus, and as I have stated before, this methodology remains one of the best tools available to accurately and reliably forecast where prices should ideally top and bottom.
Now, if (red) intermediate wave-iv is under way, as that is the preferred assumption, we must acknowledge that 4th waves are often flat corrections. Flat corrections consist of an initial three-wave drop (in this case blue wave-a?), followed by a three-wave advance (in this blue wave-b?) and a final five-wave decline (to red wave-iv). The Dec. 3 low got right in the ideal target zone I had set forth for my premium major market members several days prior. From there, I then forecasted the index would ideally rally to the orange resistance zone (smaller blue box). The index complied. Now, in flat corrections, the b-wave can become irregular, meaning it will go beyond the start of wave-a, which in this case is (red) intermediate-iii.
Since the index did not reach the (red) 161.80% extension at NDX16949 on the previous run, it would not surprise me if this rally/b-wave will do the trick. Or, as Darth Vader tells his son Luke in Star Wars: Episode V - The Empire Strikes Back (1980): “It is your destiny.” Thus, we have to watch for a possible breakout above the blue target box to propel the index to where it should have reached initially. The NDX can then stage its five-wave decline, which can either be shorter, equal or longer than the a-wave. But please keep in mind, the index is now at an inflection point. It only requires a catalyst to start the potential c-wave lower.
A break below yesterday’s massive futures-driven gap-up open would be an excellent first signal the red wave-iv lower target zone is up first before 17,000 is seen. Thus, thanks to the EWP, we now have our if/then parameters in place. And it appears, in the short-term, the easy money has been made. Letting the market decide what’s next would be a prudent approach. Long-term investors should ignore the current scribbles, whereas swing traders may also start to tighten up their stops and trades.
Get The News You Want
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.