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Saturday, June 6, 2009

The Nasdaq Count

The NASDAQ always seems to sport wonderful waves. One reason I have my overall SPX count the way I do is because it aligns very well with the NASDAQ.

The last ascending triangle has not been backtested and there is a very good chance that that happens first thing this week. We'll know very soon on Monday. If it backtests, I have it as a B wave expanded flat. The back test needs to hold for a B wave low (if the move down happens) and then 1 more 5 wave move to P2 peak.
The Nasdaq was 10 points shy of its 38% Fibonacci retrace spot of the entire bear move from Oct 2007 peak. If another move to peak happens and it attains 2000, that would be a 46% retrace, not bad for a wave 2. Overall its a strong reason P2's price peak may have been reached at that mark.


  1. I don't understand something. If you are calling for P2 ending somewhere near 2050 on the NDQ, how come you don't see SPX trading above 1K??

    If the NDQ go up more than 10% from these levels, then SPX should Trade easily above 1000, perhaps 1025 which is 38.2% retracement of the entire decline.

    I'm quite confused, cause you see NDQ above 2K but SPX not over 1K or I missed something??

    BTW, excellent charts. +1.

  2. I'm only suggesting 130 more points for NASDAQ not trading above 2000. Theres a difference.

    SPX would be high 900's. Banks and transports would weight it down.

    DOW would go nicely up though.

  3. Dan,

    Thanks for your charts. I have a hard time thinking P2 would end right here for the following reasons:

    1) Rally only started 3 months ago. I think there are many dip buyers; and they would be happy to jump in at SPX 850 or 780.
    2) The overseas markets are getting new high (HSI, and the Chinese markets); and it will take some time to take down this bullish sentiments
    3) It take more time for GS or the likes to unload their positions to retail investors
    4) Still too many bears waiting to jump in to short after this peak. THey need to eradicate all the bears...

    But then, P2 ended 3 months ago, and we are already at this bullish stage. Crazy. My reasons are very subjective; but I still believe we may just be going into (B) and there is still a (C) during the summer to achieve SPX 1100.

    Nevertheless, building a short position here seems to be the play. I don't see one straight shot to 1100. Maybe 1000 then come back down to 875 before the next leg up.

    It is all about sentiments now; all fundamentals are out of window.


  4. I think another leg up after good correction is possible, like Derrick said.

    After all, don't we need at least a 38% correction?

    Everybody expect a nce rebound in Q4 but when it gets closer they will find out that evn though GDP will turn positive the corporate profits are not improving.

  5. If the Prema-bears are bullish, isn't that a signal that we are at the top. All the bears that would entered the market already did. Ussually the reversal comes when no one expects it especcially retail.