Is the NASDAQ100 Forming an Even Larger Top?

The Drop And Rally Arrived As Anticipated

Late November, see here, we were based on the Elliott Wave Principle (EWP) looking for the NASDAQ100 (NDX) to put in a local top, drop to ideally $15,750, while holding above $15,738 on a daily closing basis. The next step would then be

“A daily close above $16,120 [will] allow us to be more confident [to] look for $16,315-620 for the green W-5 of the red W-v of the black W-c/3.”

The index reached $16,166 on November 29 intra-day but closed at $15,987. Since we work on daily closing prices, which are the essential price of the day, it was close to $ 16,120, but there was no cigar for the Bulls. It was a B-wave. Similarly, on December 4, the index bottomed out at $15,695 but closed at $15,839. Also close ($15,738 was the cut-off), but no cigar for the Bears this time.

From that low, the index rallied to new uptrend highs: green W-5 of red W-v of black W-c/3. See Figure 1 below. Thus, our assessment was -overall- correct, albeit the green W-4 became a bit more complex than anticipated.

Figure 1. NASDAQ100 daily resolution chart with technical indicators and detailed EWP count.

The NDX should now wrap up the smaller waves (grey W-iii, -iv, and -v) of the green W-5. See Figure 2 below.

Price Levels the Bulls Must Hold

From Figure 2, we deduce that the first level the Bulls must hold is $ 15,990. Below that is a severe warning the more significant top has been struck because 1^st and 4^th waves (grey W-i, iv in this case) are not allowed to overlap in a standard impulse. The next level to hold is $15,690. Below that, the green W-5 cannot subdivide anymore, and the Bears can target $15,382, possibly as low as $ 14,700.

Figure 2. NASDAQ100 hourly resolution chart with technical indicators and detailed EWP count.

Please note that after the index bottomed out on December 4, we informed our premium members on December 6 that as long as the index would hold the $15695 low, we would be on our way to $16295+. The blue dotted arrow in Figure 2 was our symmetry and EWP-based trade trigger: a break above $ 15,990 would target $ 16,250+.