Our final two updates for the (NDX) confused that “any Bear market/correction is a Main Shopping for Alternative (BIMBO) for these wanting past at present and tomorrow. This time, it will likely be no totally different.” Living proof, in our replace from April 8, we concluded,
“we deal with the index wrapping up these smaller 4th and fifth waves, which shall be adopted by a rally of a minimum of 15-25%.”
Quick-forward, and the index has been up over 22% since then. Apart from, in our earlier replace, we discovered that the NDX would attain a minimum of round $21400. Presently, it’s buying and selling at $21300. In the meantime, solely 11 to 29% of particular person traders per the AAII sentiment survey have been bullish since April 16. Thus, analyzing the inventory market’s worth charts objectively utilizing the Elliott Wave (EW) Precept helped us clarify its situation and prevented bias and subjectivity, which in any other case would result in irrational choices, e.g., promoting as a substitute of shopping for.
Now that three extra weeks of worth knowledge can be found, we’ve extra particulars for forecasting the index’s most definitely path. Permit us to elucidate beneath.
Determine 1. NDX day by day chart with detailed Elliott Wave rely and technical indicators
The index ought to now be within the orange W-3/c, and though we nonetheless can not know at this stage if we’ll get 5 waves up (1-5) or solely three (a-b-c) on the varied levels (orange, gray, inexperienced), we desire the five-wave sequence because of a number of exterior components like latest breadth thrusts. Nonetheless, we should proceed to label the present advance as 1/a, 2/b, 3/c, 4?, 5? till one or the opposite has been confirmed. Thus, we count on the orange W-3/c to finish at round $21400, then a pullback for the orange W-4 to ideally $20800+/-100, adopted by the orange W-5 to $22000+/-200 and many others., contingent on the index’s worth holding a minimum of above $20000 (gray warning degree) and particularly $19600 (orange warning degree).
Specifically, because of the latest rallies since April 8, which overlapped with the early March (crimson W-a) low, we all know that the decline from the February excessive into the April low was solely three waves: crimson W-a, -b, and -c, and thus corrective. See Determine 2 beneath.
Determine 2. NDX weekly chart with detailed Elliott Wave rely and technical indicators
This implies the index will rally to new all-time highs. However, we don’t know but precisely how, both instantly per the inexperienced five-wave sequence (inexperienced dotted arrow in Determine 2) or by way of a detour, the place the NDX stalls at round $21500-22500, falls again to ~$15,400, after which rallies to new ATHs (orange dotted arrow). Please word that this isn’t our most well-liked choice; it’s our various. We all the time commerce and make investments utilizing the popular path: Determine 1. The choice is our insurance coverage IF the market takes this low-odds path. Apart from, it takes a break beneath $19000 from present ranges with a extreme warning beneath $19600 to inform us that’s what the market desires. Thus, we can have ample forewarning.
