As investors anxiously scan the financial horizon, the Nasdaq 100 chart stands as a canvas painted with the intricate strokes of the Elliott Wave Principle (EWP). Merely three weeks ago, a proclamation was made, invoking a Bullish EWP count that cast a veil of optimism. The index’s prospects seemed to hinge on its ability to maintain its stance above $19,100, a pivotal threshold marking the third warning level.
“We must apply a Bullish EWP count until proven otherwise, and as long as the index can stay above $19,100, the third warning level, we can foresee it wrapping up the grey W-iii, followed by a grey W-iv, v; red W-iv and -v. … The waves’ target zones are at this stage but subject to change: $20,100+/-50, $19,600+/-100, $21,000+/-500, $19,200+/-200, and $25,000, respectively.”
Validity was lent to this bullish stance as the NDX diligently adhered to the prescribed impulse. Embarking on a triumphant journey, it reached its zenith on June 20th, dancing merrily at $19,979, only to dip momentarily to $19,472 on June 24. And now, as the curtain rises once again, it confidently struts at $20,378, eager for the next act. (see Figure 1)
Like clockwork, the bears attempted a dance, striving to sway the index below the first warning level, now proudly perched at $19,620 (a blue dotted line of resilience). Alas! The NDX Bulls, with a spirited roar reminiscent of champions, seized the momentum and propelled the index teasingly close to $20,500, a milestone worth fireworks and acclaim. Thus, a swift adjustment to the EWP count was made, ushering in expectations of a green W-3, 4, and 5 arrangement for the red W-v of the black W-5 symphony.
An ideal scenario unfolds where the green W-3 gracefully bows at the 161.8% Fibonacci extension ($20450+/-50), followed by a harmonious descent of the green W-4 to the 100.0% Fib-extension ($20110+/-50). The grand finale arrives as the last green W-5 crescendos ideally to the 200.0% extension at $20665+/-50. Patrons of this market opera eagerly anticipate this orchestrated performance over the next 2-3 trading weeks.
The riddle of warning levels for the Bulls morphs continuously – a testament to the ever-evolving narrative. The blue flag of caution now waves at $20,200, beckoning vigilance. The grey enigma looms at $20,000, followed by a trail of suspense and speculation. A break below $19,470, marking the red 4th warning level, would signify a somber shift from Bullish to Bearish – a lyrical tragedy best avoided if the market maestros heed the earlier warnings as whispers of wisdom. The specter of negative divergence begins to cast its shadow, a subtle discord between index price ascension and technical indicators (TIs) faltering – a cautionary tale told by red dotted arrows.
Reflect on the historical tempo set in the February-March duet – a symphony of discord, where divergence whispered a premonition. Conversely, the mid-May to mid-June melody sang in unison, a divergence-free harmony assuring the audience of higher notes post red W-iv interlude. Thus, like a seasoned conductor, the market beats to the rhythm of divergence or unity, orchestrating a melodic journey for the discerning spectator.