Last week I reviewed the NASDAQ charts and several other (indirect) indicators. See here. Although the price-charts looked weak and the indirect indicators were flagging warning signals, I was cognizant of the fact that “Price now needs to drop below … $6335 and below the mid-August low ($6177) to confirm major-3 peaked. If it fails to do so, and instead rallies higher, intermediate-v is subdividing targeting first $6540-6570. For now, however, the daily chart looks weak and bleak and the TIs want to see lower prices.” Well, we got those lower prices right on cue on Monday and after that it was back up from there. I call that 2:0!
In addition, I concluded “… the daily, weekly, and monthly charts of the NASDAQ all show fading momentum on the back of higher prices, which is confirmed by the over time decreasing breadth numbers, while complacency is at historic lows again. Only a stellar performance this week by the index can erase all these negatives, and reset the clock.” And the stellar performance we got; thus resetting the clock. Although the NDX still hasn’t made higher prices yet, which is a bit of a conundrum and should be monitored closely for additional clues, the S&P has.
While I’ve guided my members correctly off the SPX2417 low (see the daily updates archive for proof), I provided them with several wave possibilities as the market is always all about possibilities and the probabilities of those. As the market grind higher, while staying on the right side of the trade as all wave-count options were looking to at least SPX2510, I was then able to eliminate several of these options subsequently. This is how it’s done; elimination through logical reasoning.
Now we’re left with one option: the Bullish option, which should target SPX2595ish. The hourly chart below shows the preferred wave count. Although I have a 1-minute chart down to the zepto-wave-level and which is tracking along very well, and used by my premium members who primarily day trade, the hourly chart shows price is now ideally in nano-v of micro-3 of minute-iii of intermediate-v of major-3.
The 1.618x extension of (orange) micro-1, measured from 2, targets SPX2531, which is a very common Fib-extension for a 3rd wave
I then expect micro-4 to retest the breakout level of around 2512-2509 before micro-5 gets underway to around SPX2550 to complete minute-iii. After minute-iv I then expect minute-v to target ~SPX2595 which is the 2.000x extension of Major-1 (SPX1810->2111), measured from the major-2 low (SPX1992).