NASDAQ update: how low can it go?

Dear followers, thank you for your patience as I am sorry for the long hiatus in public updates, but I’ve been very busy in getting my own Hedge Fund off the ground (see here), off which I am very proud, as well as keeping my premium members on the right side of the trade and updating them as accurately as possible (see here and here), while being on the road and dealing with some family sicknesses including my own. But, that’s now all behind and things are rocking.

All my premium members who followed my “how to trade this” advice I present in my daily market updates (see here) got stopped out at just below SPX2825 or SPX2769 depending on investment strategy only days before the big scary plunge. Thus, profits were well-protected and now we can start to look into buying again: rinse-lather-repeat.

Question now is when and where to buy again? First, lets look at my last update starting with the NASDAQ (NAS) See here. Back then I was looking for the NAS to reach ideally* $7335 for minute-iii, drop to $7165 for minute-iv and than rally to $7427-7457 for all of major-3. The index gave us $7330 for iii, BINGO!, but than we got only $7205 for iv, which turned out to be only a 1-day event, whereas minute-iii was 2-weeks long. This was unanticipated. With iv bottoming $50 above it’s ideal* target we then got the minute-v rally to $7505, also and logically $50 above it’s upper end of the ideal target zone. Thus, all in all not a too shabby a forecast.

Than the bottom fell out of the market rather quickly until yesterday. So, what do we have now? Most likely and preferably intermediate-a of major-4 bottomed and intermediate-b is underway, to be followed by intermediate-c to ideally $6675, for an ideal c=a relationship. The ideal* path forward is shown below.

COMPQ 1

Why did the NAS bottom yesterday at $6825? Because that is the 23.6% retrace of major-3 as shown in the weekly-candle chart below. Funny how that works huh!? 4th waves, depending on the market’s Bullishness, often retrace between 23.6% to 38.2% of the prior 3rd wave. This is highlighted with the black box. Thus major-4 can already be in, but since major-2 took many weeks (47 trading days to be exact), it can be expected that major-4 should take a bit longer than 7 days. Of course price trumps everything, but time symmetry should not be ignored.  In the case of a 38.2% retrace, the a-wave of the 4th wave bottoms at the 23.6% retrace and the c-wave then targets lower after the b-wave “bounce”. In this case to as low as $6675 (38.2% retrace). This would mean the b-wave targets $7321 or 7482; respectively. Since we’re look for a zig-zag based on the “rule of alternation” between 2nd and 4th waves. The lower end of the b-wave target zone seems more likely as the higher-end is almost a full retrace. This is shown in figure-1 and coincides with a 76.4% retrace of wave-a.

compq weekly TI

Thus the current b-wave “bounce” is most likely underway and given current price action, likely wave (a) of b is close to completion. A small retrace for (b) of b and than a final rally for (c) of b is anticipated. Once major-4 is completed we can expect a new impulse wave to new ATHs. A continued and rather unabated rally over the next few days will however mean Major-4 is more likely than not already in.

* Please note I write “ideal” because although the market moves along “ideal” lines most of the time, there are enough times it doesn’t. Hence, we simple can’t forecast the market’s price moves correctly all of the time. Nobody is infallible.

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