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.
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.
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