This is an excerpt from this week’s digest sent to Premium Members yesterday. NEW: three to four days old Premium Member Daily Updates can now be accessed for free here. Please bookmark and enjoy 🙂
“The Tech sector got whacked on Friday and since it has been leading the pack over the past months, it is prudent to take a look at where this sector is in its Elliott Wave counts and how the technicals are stacking up. The weekly chart can be counted as having completed minor-3 of intermediate-iii of major-3, etc (see figure 1). But the monthly chart (Figure 2) seems to suggest, based on the 1.618x Fib-extension that all of intermediate-iii may have topped; 43p (0.67%) above the ideal target. However, the monthly RSI5 is now at a max overbought reading, which mostly coincides with a wave 3 of iii of 3 (see late 2013). The weekly Technical Indicators (TIs) are however weakening, but barely pointing down.”
Fig. 1: NASDAQ weekly candlestick TI chart. For wave labeling please see here.
“In addition, several big tech names (e.g. AAPL, FB) have likely made larger tops or are close to larger tops (e.g. GOOGL) that support the big-picture count shown in Figure 2 below: the NASDAQ is IMHO about to complete Cycle 1, but has still 2-3 more up/down waves to go similar to those big-tech names (recall it’s a market of stocks). Thus, betting on “one more push up (possible minor 5)” in the tech sector is becoming an increasingly precarious situation, especially with the knowledge that all of that possible advance will be retraced at a minimum.”
Fig 1. NASDAQ monthly candlestick TI chart. For wave labeling please see here.
“Please note that when big (tech) names are all down at the same time by that much (e.g. AAPL and AMZN erased >1 month of gains) the market is telling us something. It is therefore prudent to listen and assess and analyses the charts –and your portfolio- extra carefully. As I said before to my Premium Members, and I suggest the same to you, the closer we get to SPX2500 the more prudent it will become to start cashing in on winners.“