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Combined Elliott Wave and Hurst Cycle Analysis of the Nasdaq (NQ Futures Contract) by Sid from ElliottWavePredictions.com

 Nasdaq, NQ Futures Contract, QQQ  Comments Off on Combined Elliott Wave and Hurst Cycle Analysis of the Nasdaq (NQ Futures Contract) by Sid from ElliottWavePredictions.com
Mar 112016
 

Combined Elliott Wave and Hurst Cycle Analysis of the Nasdaq (NQ Futures Contract) by Sid from ElliottWavePredictions.com.

The NQ futures contract has been presenting very clear internal wave structures and Hurst cycle designations for past year and a half, and should be considered a proxy for wave counts and Hurst Cycle analysis in other US stock market indices, in my opinion.

NQ daily 3-11-16

Starting at the October 16, 2014 low, the upward movement into the July 20, 2015 high carved out a clear ending contracting diagonal.  I’m labeling that July 20 high as the end of blue (minor degree) wave 3 within black (intermediate) wave C of a burgundy (primary) wave Y within an upward double zigzag that started all the way back in at the October 2002 low.  Then, the strong downward move from July 20 into the August 24, 2015 low was in three waves, so I’ve labeled that low as the end of blue wave 4.  That was followed by an upward 5-wave impulse into the December 2, 2015 top.  I’ve labeled that top as the end of teal (cycle degree) wave B.

Then, from the December 2, 2015 all time high in the NQ, price moved down in a clear 5-wave impulse into the February 11 low.  Upward movement from that February 11 low started quite aggressively but appears to have lost momentum over the past week.  Importantly, the upward movement from the Feb 11 low appears to be forming a corrective, 3-wave (blue) ABC structure.

As for a Hurst Cycle analysis, we use an unaltered Sentient Trader nominal trough-based model on the continuous NQ contract starting at the March 2000 mania top.  This analysis has remained consistent for many months.  It labels the October 16, 2014 low is the last 18-month cycle trough, the August 24, 2015 low as the last 40-week cycle trough, and the February 11, 2016 low as a 20-week cycle trough.  Moving forward, and this is very important, there is an 18-month cycle trough still in front of us, due in mid-June of this year.  Is the stock market going to continue to climb as that 18-month cycle trough draws nearer and nearer.  Likely not.

So we currently have 5-waves down into from Dec 2 through Feb 11 followed by an ABC partial retracement, which is losing upward momentum with wave C (blue) currently shorter than wave A was.  Hmmm . .

Wave 2’s most commonly retrace between 50 and 61.8% of wave 1’s.  Also, price appears to have moved up into an 80-day cycle topping date window.  The resulting target zone for a top for wave 2 is shown on the chart by the gray oval.  The Sentient Trader “composite line” (CL) is suggesting that the NQ will top early in that window, which makes sense, as the longer cycles will theoretically provide gradually increasing downward pressure through mid-June.

Please join me for my Weekly “Counts” Webinar, where I go over all of my Elliott Wave counts and associated Fibonacci price targets for many of the world’s major stocks markets, commodities, currencies, and bonds.  Hurst cycle analysis is considered on almost all items.  A link to the recording of the webinar is emailed to all “Counts” webinar subscribers immediately afterward, whether they were able to attend “live” or not.  Alternatively, my EWP ScreenShots service provides updated multi-timeframe analysis of the SPX, DAX, Gold, Oil, TLT, US$ (DX), & EUR/USD currency pair twice each week.  All “Counts” webinar subscribers receive EWP ScreenShots as a free bonus.  Many traders and investors have found my analysis quite profitable.

Sid Norris
http://elliottwavepredictions.com

Elliott Wave Analysis of the Nasdaq 100 Index ETF (QQQ) by Sid from ElliottWavePredictions.com

 ES futures contract, Nasdaq, QQQ, S&P 500  Comments Off on Elliott Wave Analysis of the Nasdaq 100 Index ETF (QQQ) by Sid from ElliottWavePredictions.com
Nov 052015
 

Elliott Wave Analysis of the Nasdaq 100 Index ETF (QQQ) by Sid from ElliottWavePredictions.com.  Click on the charts to enlarge.

There are several ways to track the Nasdaq.  Today I’m showing the Powershares QQQ Trust, which generally tracks with the Nasdaq 100 Index.  First, let’s take a look at a long-term (monthly) chart:

QQQ monthly 11-5-15

The most important aspects shown in this chart are:

  1. The initial upward movement from the October 2002 low counts best as corrective.  I believe it is a double zigzag, and have labeled it primary (burgundy) wave W.
  2. The subsequent drop into late 2008 falls short of retracing 90% of the up move from October 2002.  I’ve therefore labeled the November 2008 low as burgundy wave X.  This labeling suggests that the upward movement from the November 2008 low is going to be a black ABC zigzag.
  3. The monthly RSI has already topped and has fallen out of overbought territory.

QQQ weekly 11-5-15

As we look in at the weekly chart, starting at the December 2011 end of the black B triangle, the upward movement associated with black wave C has certainly displayed the characteristics of a thrust from a triangle, moving relentlessly to the upside for almost 4 years now.  Because the up-thrust from Dec 2011 is projected to be a C wave, it should subdivide into 5 (blue) waves.  I’ve decided to keep the blue 3 label at the September 2014 high because it has a better near Fibonacci relationship (2.618) with the length of blue wave 1 there.  Then, I’ve labeling the structure from Sept 2014 through August 2015 as a double zigzag for blue wave 4, with an unusually stretched X wave in the middle of it.   There are other interpretations.  For instance, blue wave 4 may still be underway as an expanding triangle.

Finally, the daily chart:

QQQ daily 11-5-15

Now that the Q’s has taken out the July high, how high will it go?  The next large degree target is at 117.49, where primary (burgundy) wave Y will equal burgundy wave W times 2.618.  Based on my independent interpretations of the Dow, S&P, and Russell, the roadmap shown on the chart seems most likely.  Down in November for a pink wave 4, and up in December for a pink wave 5, ending about year-end.  While the Nasdaq is moving down in November for its pink wave 4, I think most other indices will produce a relatively modest wave 1 to the downside. And then, while the Nasdaq is making its final pink wave 5 high toward year-end, the other indices with be partially (and probably deeply) retracing their November waves 1’s with December wave 2’s.

Update on the S&P-500:  In my last free SPX post (Oct 30), I suggested that a top may be “in” at the Oct 30 high.  While all subdivisions could be counted complete on that date, price worked its way into new highs on Monday.  Monday night, I emailed the following chart to subscribers, with the following message:

“EWP ScreenShots subscriber update:

The short-term wave structures on the ES futures contract (S&P-500) appear to be a bit more clear that on the S&P cash index itself.  The choppy, volatile, but progressive upward movement since October 27 appears to be carving out an ending expanding diagonal.  The final 5th wave (orange) of that diagonal appears to be incomplete.
If that interpretation is correct, we should see one last rally to a minimum of 2103.75 in the ES.  The only Fibonacci target left before 2116.75 invalidation is at 2108.0, where green wave 5 will equal the net traveled of green waves 1 through 3 times .618.
Interestingly, the wave structure on the SPX cash index cannot be counted the same way.  In that SPX, the next strong fib target is at 2120.73, where blue wave C will equal blue wave A times 1.618, if blue A is placed at the Sept 17 peak.  Also, green 5 will equal green waves 1 through 3 at 2118.12.  Black 2 invalidation is at 2132.82.
Wave counts on the cash index take precedent over wave counts on the underlying futures contract.  The SPX cash index is currently riding about 8.5 points above the underlying (and highly leveraged) ES futures contract.”
The following chart was attached:

ES 90m 11-3-15

So far, Monday’s interpretation (above), as emailed to all EWP “Counts” Webinar  and EWP ScreenShots subscribers has developed as planned, as the top tick on the ES (as of this writing) was 2110.25 on Tuesday, and 2116.48 on that same day in the S&P-500 cash index (SPX).

ES 30m 11-5-15

Please join me for my Weekly “Counts” Webinar, where I go over all of my Elliott Wave counts and associated Fibonacci price targets for many of the world’s major stocks markets, commodities, currencies, and bonds.  Hurst cycle analysis is considered on almost all items.  A link to the recording of the webinar is emailed to all “Counts” webinar subscribers immediately afterward, whether they were able to attend “live” or not.  Alternatively, my EWP ScreenShots service provides updated multi-timeframe analysis of the SPX, DAX, Gold, Oil, TLT, US$ (DX), & EUR/USD currency pair twice each week.  All “Counts” webinar subscribers receive EWP ScreenShots as a free bonus.  Many traders and investors have found my analysis quite profitable over the years.

Sid Norris
http://elliottwavepredictions.com

Elliott Wave Analysis of Cisco Systems Inc (CSCO) by Sid from ElliottWavePredictions.com

 Dow Jones Industrial Average, Individual Stocks, Nasdaq  Comments Off on Elliott Wave Analysis of Cisco Systems Inc (CSCO) by Sid from ElliottWavePredictions.com
Mar 312015
 

Elliott Wave Analysis of Cisco Systems, Inc. (CSCO) by Sid from ElliottWavePredictions.com.  Click on the charts to enlarge.

This continues my series on Dow 30 components.

CSCO monthly linear 3-31-15

As you can see on the monthly chart above, after crashing over 90% in a 5-wave impulse from March 2000 through October 2002, CSCO has been stuck in a long, sideways consolidation.  Probably the most important aspect of Cisco’s “recovery” starting in October 2002 is that the initial rise into November 2007 was a clear 3-wave zigzag, shown outlined in green on the chart.  That corrective initial rise cannot be wave 1 of a bold new 5-wave impulse rally to new all-time highs.  Rather, it suggests that after a corrective period, Cisco stock is likely to make new lows below the 2002 low before the next, large-degree rally phase can begin.

That initial zigzag from 2002 through 2007 was followed by downward ABC zigzag into August 2011, which I’ve outlined in red on the chart.  While it is possible that the November 2007 high can be labeled as Primary (burgundy) W, and the August 2011 low as burgundy X, it seems more likely that CSCO is carving out a Cycle (teal) Degree Wave B triangle.  That expectation is supported by the character of the upward price movement since August 2011, which is more jagged and complex that any of the other waves since 2002.  Typically, within a contracting triangle, “wave C subdivides into a zigzag combination that is longer lasting and contains deeper percentage retracements that the other subwaves.” (Elliott Wave Principle, Frost & Prechter, 10th edition, 2005, page 90).

CSCO weekly 3-31-15

The weekly chart above shows more closely the complex, choppy, overlapping nature of the rise since August 2011.  The upward movement since December 2013 is especially volatile, and appears to have started with a leading expanding diagonal for Minor (blue) wave A.  The subsequent blue wave B was quite brief, if I have it labeled correctly, as was the following blue wave C.  Despite the brevity of those most recent waves, it seems most likely that the Primary (burgundy) wave C top is “in” on Cisco for several reasons (shown on the weekly chart above):

  • Wave C burgundy has already retraced burgundy B by a deep 78.6%.
  • Wave D (burgundy) of the 13-year-long (so far) triangle is likely to coincide with the next Hurst 4.5-year cycle trough, which, according to Sentient Trader software analysis is due in early 2016.  If a triangle is truly underway, further new highs would not fit well with an expectation of triangle-like proportionality.
  • Weekly MACD histogram divergence appeared at the early March 2015 high.

CSCO daily 3-31-15

Additional evidence that CSCO recently made a large-degree trend change also appears on the daily chart (above):

  •  The very recent downward movement from March 2 though March 26 has occurred in 5-waves.
  • A potential head and shoulders top is currently under formation.

QQQ monthly 4-26-15

One last bit of food for thought:  Why has Cisco stock been so weak since its November 2007 “recovery” high, while the tech-heavy Nasdaq index has jettisoned to the upside starting November 2008, almost reaching new all-time highs recently?   A comparison of the monthly chart of the Q’s (above) to the monthly chart of CSCO (shown earlier in this post) is truly shocking.  Is it a coincidence that November 2008, (the bottom in QQQ), was the exact month that QE1 was announced?  And if QE caused the divergence, what do mortgage backed securities have to do with tech?  And why would QE affect the larger tech-heavy index so dramatically, but not the traditionally highly correlated Cisco shares?

Closer scrutiny of the charts of the two items indicates that the pair remained highly correlated until exactly July 2010, after which the Nasdaq index took off to the upside while Cisco stock languished.  Maybe the more meaningful coincidence is therefore that the price of Cisco stock diverged from the larger indices just following the May 2010 flash crash.  The timing of of the divergence suggests that at least some of the “distortions” showing in the markets in recent years may have resulted from market “protections” enacted due to the flash crash, and not necessarily from the gradual effects of, or market reactions to QE.

Sid

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