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Saturday, July 4, 2020

Solving the NASDAQ Count (and thus the 2020 market) - [Lots of updates]

I have been pounding my head trying to make sense of the NASDAQ count. If you look back over the last month the counts are all over the place. Elliott Wave International never seem to post a full count from the March lows either (not that I would have the same count). I think they are just as confused.

Why is this important? Well if we can solve the NASDAQ count, we can glean important clues on how that ties into other index counts.  Find the NASDAQ top, and you've solved the 2020 market...well that's been my thinking anyways.

And then it finally dawned on me. It's not much different than our Wilshire count. Why would it be? The market has surged and retreated together its just that the NASDAQ is catching more of a bid at certain spots, But otherwise, replace A and B with 1 and 2 on the NASDAQ and C with 3 and viola!

Once I did the above, it fell into place rather quickly.  Its not a true ending diagonal pattern as was suggested in Thursday's update. (doesn't mean it won't drop like a post-wedge).

And oh yeah, it may have peaked.   The top ALT to this count is that Thursday's high was wave [i] of 5.   The count is that Thursday was [i] of 5 peak.  The ALT is 5 has peaked.  Since wave 3 is shorter than wave 1, wave 5 cannot be longer than 3 by Elliott Wave rule. This is the one unbreakable rule. Therefore if this count is correct there is an upside limit in price.

One thing about this rebound off the March low is that wave one's of all degrees seem to be the big waves, wave threes, not so much, and wave fives kind of short.

Looking for some kind of upper trendline strike would be ideal.
Here is the composite off the 2009 low. This took much longer in time obviously so the wave dynamics a little different, but overall it seems a repeat more or less.
I'll add to this post. I'm going to make some Fibonacci computations and add some detailed counts since the Minor 4 low and add comments down here later.

Ok here is the NASDAQ channel since 2010. EWI alerted me to the exactness of the touches. Their channel is shown a bit different but here is mine. There are actually 2 upper channel lines. The red line goes all the way back and the green line contains tiny price spikes above the red line.

If we get a surge this coming week to 10,601 the NASDAQ will have poked through the upper red channel line to meet the green line again as a minimum. It might even try to poke above on a buying climax.  Also look at the RSI. Its a classic RSI profile for a wave 5 peak.
Ok here is the proposed wave 4 upward 3-3-5 flat and subsequent breakout. My best guess is only [i] of 5 has peaked.  Note the ALT: 5 count.  Wave [i] would be the longest wave in wave 5 is my logical guess because again, every wave one of any degree seems to be the longest.
And yet another look using the 15 minute chart.  10,601 makes a good target.  If these final surges happen where will the Wilshire be at in price? That's hard to say. Bidding is getting more narrower to the NASDAQ only. EWI mentioned that the volume level ratio between NASDAQ and NYSE keep surging to more and more record spreads. 

That reflects in price on both indexes obviously.
If the NASDAQ surges to 10,601, the Wilshire (and SPX) would likely come very close to its wave (2) peak within a few points.  But my bet is the (2) will hold on the Wilshire because the market bidding probably would have narrowed even more by then.

Here is a chart comparing the 2 recent surges from last. The NASDAQ is running hotter of course  by about about 1.2%. If we project another surge to the 10,601 spot on the trendline, and compute that surge with the Wilshire lagging in % as last week, the Wilshire would likely not take out its peak.  It would be close, but the June 8th high should hold on the Wilshire.
Of course if and when that happens, I'll get all kinds of hate mail.

Ok some more based on the NASDAQ count. The VIX would to a new low. Which means I was missing the final wave after all.
Updated count of the Wilshire and how that might tie into the NASDAQ count.  The [ii] high projects to Friday the 10th or Monday the 13th is best guess. It "looks" right.  We are on wave ii it might pull back deeper come Monday. This pullback would create the "triangle effect" on the DJIA which would propel it higher. Remember the discussion on false triangles a few posts back.
Likely effect on the DOW.
Again the [i] and [ii] that came after (2) in 2008. It was a parallel flat. Note the false Minor 4 triangle.
Wilshire weekly based on Primary count of the NASDAQ surging to 10,601 next week. The (2) high should hold (in theory!)
And yet another look at those trendlines as shown on the weekly. I went back and used the daily and then zoomed in and this is what I got. It makes sense that the NASDAQ would try to poke through the upper containment line at the end. Just a guess. 
Fibonacci has some interesting relationships. Currently, 10,310 is a Fibonacci .612 (.618) of wave 1 when you combine waves 3 and 5. 

The math is this:

2,619.54 points from the March low to wave 1.
Multiply 2,619.54 x .618 = 1,618.75

Add 1,618.75 to the wave 2 low of 8,705.25 = 10,324.

Thursday's high was 10,310.4. So if we get just one more tiny push to 10,324 its also a good stopping point.
Here is a comparison of wave C in the Wilshire and wave 3 in the Nasdaq. Pretty much everything is labeled near same. We have subtle differences of course.
The Volume ratio between the NASDAQ composite and the NYSE.   This is what is meant when people say that the market is narrowing to just the NASDAQ - which is likely bearish overall.  Here is some proof.
And the local daily chart.  This time I added the SPX:NASDAQ total volume ratio. 
And finally the NASDAQ showing the NASDAQ only up volume vs down volume ratio. And up issues vs. down ratio.  

Wave 5 is the weakest "kickoff" so far. Even though total market volume is pouring into the Composite, internally, the NASDAQ Composite is showing waning strength over the last 4 months. This is a perfect profile and what we would expect for a wave 5 of (5).

These are 2 hour bars, so its a good snapshot.

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