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“the [possibility] of a larger W-4 correction to be underway to between 20485 and 22835. However, we need to see a weekly close below 24000 for higher confidence (75% chance) that this is the case, as the index missed the ideal upside target [26700] by about 500 points or 2%. This gap is notable because stock markets tend to be more precise. Therefore, the index may still be in its minor 4th wave, to be followed by the final 5th wave (green W-5) closer to the 26700 level. The ideal target zone is 23000-24000, but the index doesn't necessarily have to go that low.”

Fast forward to today, the index bottomed at 23854 on Friday, November 21, within the ideal (minor) W-4 target zone, and closed that week at 24239. It is now trading around 25575. Therefore, the index remained above 24000 for the week, supporting our preferred scenario illustrated in Figure 1 below. Additionally, the index bottomed in the ideal “low risk buy zone”, which we advise our premium newsletter members to use as a swing-trade trigger.

Figure 1. Intermediate-term Elliott Wave count for the NDX

(Click on image to enlarge)

The Bulls’ warning levels are currently set at 25369, 25158, 24873, 24542, and 23854. Daily closes below each subsequent level increase the chances that the uptrend from the November 21 low is over by 20%. For example, these levels can be used as stops, while they will be raised as prices continue to move higher.

Namely, in our previous update, we examined the 65-minute chart, see Figure 2 below, and found

“the price action since the recent ATH has been trending lower, overlapping. …, it indicates that the downward move is corrective and will eventually resolve to the upside. Meanwhile, …, positive divergences ([green] arrows) are building in the technical indicators, suggesting that at this stage, the downside is losing strength, momentum, and selling pressure.”

So far, so good. Applying the EWP to the price action from the November 21 low on the same 65-minute chart, we see that the rally is currently an impulsive move: five-wave advances and three-wave corrections.

Figure 2. Short-term Elliott Wave count for the NDX

(Click on image to enlarge)

We expect the orange W-3 to peak at the 161.80% extension (~26635), followed by the orange W-4 reaching 25300 ± 100, and a final W-5 to complete the gray W-iii at 25900 ± 100, etc. The ideal gray W-v target zone is 26500 ± 250, which will bring the index close to the ideal ~26700 target for the (much) larger black W-3. The Bulls’ short-term warning levels are set at 25443, 25158, 24542, 24214, and 23854.

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