Nasdaq 100 Elliott Wave Update: Is the Rally to 26700+ In Jeopardy?

Breakdown After Three Out of Three

By using the Elliott Wave (EW) Principle, we expected in our previous update from December 5, see here, for the NASDAQ 100 (NDX) that

“…the orange Wave-3 to peak at the 161.8% extension (~25635), 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.”

Fast forward to today. The index peaked at 25827 for the orange Wave-3, dropped to 25504 for the orange W-4, and peaked at 25835 for the orange W-5. So far, so good; all waves were essentially on target. However, the index did not reach the 26500 +/- 250 zone. It has broken below several warning levels over the last few days and is currently trading at 24780. Thus, we adjusted our perspective to view the 25835 high as only the gray W-i of a larger (green) 5th wave, with W-ii to ideally ~24600 now underway. See Figure 1 below.

Specifically, the index did not make a new all-time high (ATH) and is most likely in its 5th wave of the red W-c of the black W-3. Meanwhile, the Advance/Declining line (NYAD), not shown, made a new ATH, which strongly suggests that a bear market is not yet developing, as that often requires negative divergences (higher prices, lower AD numbers). Provided it holds above the November 21, 23854 low, the index can set itself up for a subdividing final 5th wave (gray waves W-i, ii, iii, iv, and v), ideally as high as 28000+ by approximately April 18-28, 2026.

Turn Dates

Why can we expect a top in late April 2028? For starters, average midterm election-year seasonality (not shown) peaks around April 18. In addition, the Armstrong Pi-cycle turn dates, which are always peaks, target around April 28. Is that cycle reliable?

Yes, it is. The previous turn dates foretold the March-April “Trump Tariff Tantrum” correction and the March-April correction in 2024. Because the cycle is based on Pi (3.147), it has a fixed length and cannot anticipate all corrections, such as the one from July to August 2024. However, this cycle also showed a significant peak between November 24, 2021, and January 3, 2022. The index peaked right on time and entered a nearly year-long 37% bear market.

Other important, correct calls were September 19, 2018 (>20% correction), July 27, 2015 (~20% correction), and April 25, 2011 (>10% correction, not shown). While the COVID-19 Crash was forewarned two months “too early”, nothing happened in 2017. Thus, the track record shows that when a turning point approaches, one had better pay attention.

In conclusion, if the November 21 low at 23854 holds, we can expect, based on the current data, that the Bull market will continue, ideally well into April next year, before a 2022-like Bear market begins. Below that level, it will strongly suggest that the bear market is already underway.