NDX: no impulse up off August low. Expect lower prices

2019年9月24日

The NASDAQ100 (NDX) broke below its August 22 high and therewith invalidated its potential to do five (i, ii, iii, iv, v) waves up off the August lows. Instead it became only three: corrective. Namely, when a new move starts, even if it is five waves up or down, we can never know beforehand with all certainty if that move is an impulse (wave-1 of a 1,2,3,4,5 move) or part of a larger correction (wave-A of an ABC move). See my tweet here for example. Hence, why we must label such initial advance as wave-1/a, the retrace as wave-2/b, and the subsequent advance as wave-3/c, until one (1,2,3) or the other (a,b,c) is disproved by the markets. In this case the impulse was disproved as price overlapped with wave-i/a meaning the current decline can not be a wave-iv and so there will be no wave-v and thus thus the entire rally was a wave-a,b,c UP. Simple! In addition the wave-iii/c was only seven waves up, which means it is corrective as impulses travel in 5,9,13, etc waves. Another line of evidence pointing towards the recent rally having been corrective and not impulsive.

Now that we have proper, intellectually honest Elliott wave labeling out of the way, lets look at the bigger picture options. Price can do a nice c-wave down into the orange target zone based on the standard c=a to c=1.618x a Fibonacci extensions and as long as it doesn't move below the June low it can still be a larger wave-ii of an even larger 3rd wave. IF it breaks below the June low, and especially in a five waves down move, then we have a lower low on our hands. In addition price can then not be in a (red) wave-ii anymore because 2nd waves can't go below the start of the prior same degree 1st wave, and we are then looking for a much, much larger ongoing correction, which I would label as major wave-c of Primary-IV, well into 2020.

Trade safe!