NDX: Bulls only hope is a diagonal higher, but odds are slim

2019年10月1日

Last week price on the NDX overlapped with what could potentially have been a wave-i of an five-wave impulse (i,ii,iii,iv,v) higher, making it therewith most likely only a wave-a of a three wave (a, b, c) sequence higher where wave-c was 1.618x a. Today the Bulls had the change to try for a possible diagonal pattern. Namely, in diagonals the 4th wave (iv/e) and 1st wave (a/i) - I label it as both numbers and letters to distinguish the diagonal from an impulse and from a corrective move- can overlap. It's not necessary but it happens most often. This overlap then confuses most traders and elliotticians not until often after the fact (when the diagonal completes). Thus diagonals are often hard to track and trade due to the overlaps.

That said, the Bulls had the chance for a diagonal pattern this morning as price moved above the red downtrend line, but stalled at the 20d SMA. Obviously the Bulls need price to close above both to unlock that higher potential wave-v/e target. Alas, to no avail, as price did a 180 today and if it breaks and closes below last week's low then $7300-$7200 are most likely next (based on simple symmetry), which then gets us already into the ideal green target zone for (green) minor wave-c of (red) intermediate wave-a or possible all of a (Red) intermediate wave-ii. So, we need not worry yet about that low being either wave-a or ii, as there's yet a lot of price action to come between now and then to help us assess which it will be and at what more exact price levels. Until then, my short-term trading-system, which I feature in my StockTwits Premium Room among others (https://stocktwits.com/r/SP500_System_Trading) remains "long SPXU = short" since last week, and with the MACD on a sell since last week as well, (not shown here) and price below its 20d and 50d SMA it is for now prudent to look down short- to intermediate-term with a focus on these aformentioned and shown price target zones. Once reached it's time to re-assess the charts and see what's most likely next.

Trade safe!