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Hi, This is Sid from ElliottWavePredictions.com and Sid’sCharts.com. Yesterday, I posted a video showing monthly candles on the Nasdaq $COMPQ Index. Actually, lets move to that chart first, because I’ve added a bit more detail, breaking down the wave 3 black here. It appears that wave 1 blue is complete, and that we are now in a wave 2 blue correction. As you can see, the downward movement that started February 16th is hardly a blip on the screen when looking at monthly candles. So lets switch over to the weekly candles. Here is quite a bit more detail regarding the internal structure of the waves. As I covered yesterday, I’m counting the rise through November 2007 as a 3 wave ABC zigzag, followed by another 3-wave zigzag retracing 90.1% of Primary (burgundy) wave A, and lasting until March 2009.
How this wave is interpreted is critical to the long term Elliott Wave count! Some are counting it as a 5 wave impulse for a wave 1 down, which would require, in Elliott Wave terms, a subsequent historic bear market, moving eventually well below the March 2009 low. As for me, I am counting it as an ABC zigzag for a Primary (burgandy) wave B of an apparent “flat” correction (in Elliott Wave terms).
By the way, my website, ElliottWavePredictions.com has a number of links on it to the finest free Elliott Wave educational materials available on the internet. These are the same materials I used to learn the wave principle. For instance, look for my complete outline of the wave principle, in its entirety.
Of huge importance now, since I’m counting this downward move from November 2007 through March 2009 as 3 waves, is that a subsequent 5 wave bull market is the expectation. So how is the upward movement since March 2009 best counted, when expecting 5 waves? Well, we got 5 waves through April 2010, bu importantly, not to a new high. The 5 waves we must see, if this count is correct, must eclipse the April 2010 high. Otherwise, we are looking at an almost impossibly rare running flat. It seems much more likely that we will go on to get our 5 waves up to a new high, especially since we got so very close (within 56 points) in February. As a matter of fact, we got so close, I believe this count is also much more likely than the huge, decades long triangle some are calling for, starting in October 2002, of which we would only waves A, B, and C now complete after 9 years. I think we just got through coming way too close to the invalidation of the triangle scenario to take it too seriously at this juncture.
This upward move from the June 2010 low seems to have finished its own 5 waves now, so I have labeled that high as blue (minor) wave 1, or alternatively, a short intermediate wave 3 black of Primary (burgundy) wave C. Either way, after the current correction completes, both my primary and secondary counts are calling for an upward move to complete 5 waves up, and to a now high, eclipsing the April 2010 high, which will be the highest reading for this index since February 2001.
Now lets zoom in and look at the correction going on now. For that, I’d like to look at the 360 minute candles of the Nasdaq e-mini, symbol NQ, which is how I trade the Nasdaq. My target zone for this correction is a zone starting from 2132, which is the .382 fibonacci retracement of the length of wave 1 blue, to 2082, the extreme of the wave 4 of one lesser degree, which in this case, is wave 4 pink (Minute).
Now taking a closer look at the correction so far using the 180 minute candles, I’m counting 5 waves down for a wave A pink, and a completed pink wave B up of an expanded flat, and now the terminal 5 green waves are underway, with wave 1 green nearly complete.
Switching now to the 60 minute candles of the NQ e-mini, we can see a nearly complete 5 wave structure down to complete wave 1 green, and I’m now expecting at around a .382 retracement up to near the extreme of the previous wave 4 of one lesser degree, and then LOOK OUT BELOW for a couple of weeks, while waves 3, 4, and 5 green complete to the previously deliniated target zone.
So, to conclude, we’re getting a correction here, but I believe the bull market is still in tact until a 5 wave structure to the upside completes to new 10-year highs on the monthly and weekly charts.
My Disclaimer, everything I post is for informational purposes, and is not intended to be recommendations for trades and/or investments. This is Sid from ElliottWavePredictions.com. See ya soon!