Nasdaq 100 Rally Continues as Elliott Wave Points to 24770-25570

Alignment of the Bigger Picture With the Smaller Time Frame

In late August, see here, we observed that, when zooming out, the NASDAQ100 (NDX) was, according to the Elliott Wave (EW) Principle, in an impulse (five-wave) move up from the early April lows. See Figure 1 below. Back then, we found that

“… the gray Wave-iii slightly exceeded its ideal target (23969 vs. 23720), and W-iv may have bottomed last week, falling short of its ideal target (22959 vs. 22144). Therefore, we don’t yet know if W-iv has bottomed out, …. A move above the gray W-iii high will confirm this, whereas a move below last week’s low indicates the low 22000s are first before we see the gray W-v to ideally 24092-24694.”

That move lower never materialized, and instead, the index broke above the W-iii high, indicating that the W-v to ideally 24092-24694 was in progress. Fast forward to today, and the index is trading around 24520. So far, our EW count has correctly guided us.

Expected Price Target Zones from Where the Chances of a ~5% Pullback Increase

Since markets are fractal in nature, we observe that the W-v subdivides into five smaller (orange) waves, with a W-4 bottom formed yesterday. Therefore, orange W-5 is currently in progress. The EW suggests that the 5th and the 1st waves are often equal in length, which indicates a target of 24882. See the dotted orange arrow. This brings the index very close to the 200.0% Fib extension at 24768, which is the ideal target for the gray W-v.

However, since the “5=1” guideline also applies to the gray W-v, it could reach as high as approximately 25560: W-iv + (W-v = W-i) = 22977 + 2584. See the gray dotted arrow. This, in turn, aligns well with the green 300.0% Fibonacci extension at 25574 and makes it a viable upside target.

How can we tell if the higher target will be achieved? Although no one can predict the future, we can use objective measures to determine if the current rally from the September 2nd low has finished. These are our “Warning levels for the Bulls,” which adjust as the price moves higher, helping our premium members stay confidently in the market. These levels act as safety nets, as declines below them increase the likelihood (25%, 50%, 75%, 100%) that the top is in: 1st, blue: 24347; 2nd, gray: 24173; 3rd, orange: 23999; 4th, red: 23475.