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Is NASDAQ 100's Bounce Under Way?

By Dr. Arnout ter Schure Stock MarketsSep 22, 2020 02:04PM ET
www.investing.com/analysis/is-nasdaq-100s-bounce-under-way-200538484
Is NASDAQ 100's Bounce Under Way?
By Dr. Arnout ter Schure   |  Sep 22, 2020 02:04PM ET
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As usual, let's review what was anticipated and what was realized to assess what was right, wrong and to adjust if necessary.

Last week I anticipated, "a larger bounce is now under way to ideally $11,505-11,860. From there, I expect the next leg lower to complete larger (black) wave-4. Wave-5 should then rally the index back to new all-time highs and to complete the bull that started in 2009 in the spring of 2021."

And found, "… as long as the NDX stays below $12,250, I expect the current counter-trend rally to fizzle out in the [11505-11860] target zone. After that, it should work its way lower into, preferably, the pink target zone ($10000-10500). But, as we have seen over the last few weeks, in Bull markets, "upside surprises and downside disappoints." So, please do not be surprised if only the black target zone at $10,250-10,750 is reached for the larger wave-4."

That same day the Nasdaq 100 topped at $11,495 and started its decline to yesterday's low at $10,678. Thus, the index missed the ideal bounce target zone by 10p (0.1%... pardon the market's inaccuracy…), and so far bottomed in the "do not be surprised zone" of $10,250-10,750 yesterday. It missed the purple target zone by only 178p (1.7%) but reached the shorter symmetry-based target.

Thus, the question is: Did wave-4, therefore, already bottom?

It is possible, but the failure of the index to reach the purple target zone suggests to me it may have one more twist and turn in place. It would also fit with the average annual U.S. election year pattern (see Figure 2 of my recent article about the S&P500: https://www.investing.com/analysis/sp-500-is-it-the-1970s-all-over-again-200536945). This pattern has a bottom by the 3rd week of September, a counter-trend rally into late-September, and then a further decline into mid- to late-October.

Figure 1.

NDX 100 Daily Candlestick Chart With EWP Count.
NDX 100 Daily Candlestick Chart With EWP Count.

This "twist and turn" would be red wave-b and -c, as shown in Figure 1. The former, a counter-trend rally, should ideally top around 11335-11755 before wave-c moves the index to the ideal (purple) target zone of 10000-10500. Once wave-b is confirmed, I can then further adjust the ideal wave-c target zone as I am still trying to look around 2-3 corners simultaneously, which leads to increased uncertainty.

For now, the daily chart is giving some positive signals, with my proprietary AI buy/sell indicator turning back up, and some divergence on the daily RSI5 (green dotted arrows). I prefer to see a strong close today and, additionally, a close above the 50-day Simple Moving Average to add further weight to the evidence this path is unfolding.

A close below today's low, followed by a close below yesterday's low, will force me to adjust my current perspective in that wave-a is still unfolding. Thus, we have exact, simple, cut-off levels to know which it will be. These can very easily be applied in one's daily trading decisions for buy and stop triggers. That is the beauty of the Elliott Wave Principle, combined with Technical Analyses.

Is NASDAQ 100's Bounce Under Way?
 

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Is NASDAQ 100's Bounce Under Way?

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Comments (6)
Momentum Tradarn
Momentum Tradarn Sep 23, 2020 1:47PM ET
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Doc, will you keep updating us for free here, or what is your future plan? Again, your work is excellent in so many ways, thanks!
Dr. Arnout ter Schure
Dr. Arnout ter Schure Sep 23, 2020 1:47PM ET
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thank you, once a week updates will continue.
Daniel Morel
Daniel Morel Sep 23, 2020 9:10AM ET
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I have a much simpler advice - DO NOT FOLLOW financial advise DO NOT over complicate things DO NOT see be short term. I have been invested for 51 years, since i got my first paycheck as a young engineer. When I advanced in my career i deferred 90% of my salary and 100% of my bonus invested in Mutual funds at Fidelity and Vangard then some broad market ETF. I read but never follow any financial comentary i watch financial channels for entertainment - after 51 years my average is + 11.8% with a high of 38% and a low of - 11%. I sell when my profit is +10% for a stock and +15% for a call option - I keep 25% in cash to gradually buy the dips - i was able to send two kids to grad school / buy properties in New york / a house on a private island in Miami Beach and a flat In London. I am writing while having breakfast from a 27 meters chartered sailing yacht facing the island of SANTORINI in greece. Every hard working person can do that - just stick to one strategy - be patient -
Stefon Walters
AgapeGrace Sep 22, 2020 8:47PM ET
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Good job Doc. Your projections were accurate. 👍🏻
Dr. Arnout ter Schure
Dr. Arnout ter Schure Sep 22, 2020 8:47PM ET
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Thank you!
Stefon Walters
AgapeGrace Sep 22, 2020 8:47PM ET
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Dr. Arnout ter Schure Well if i am going to criticize you, I must also give credit where credit’s due. Forge onward soldier. 👏🏻
Dr. Arnout ter Schure
Dr. Arnout ter Schure Sep 22, 2020 8:47PM ET
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Stefon Walters fair enough! Thank you.
Ron Keegan
Ron Keegan Sep 22, 2020 8:30PM ET
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I have a difficult time believing Nasdaq 100 will be taking out highs any time soon. The 200 day average at 9490 and i would expect that will happen at some point before the elections. I see the trend as down with resistance going up at the 50 day average and potentially the 20 day as the 20 day starts decending.
Dr. Arnout ter Schure
Dr. Arnout ter Schure Sep 22, 2020 8:30PM ET
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Please see my recebt article on the S&P500 “is it the 1970s all over again” on why I don’t see a major top until spring 2021.
petey heeley
petey heeley Sep 22, 2020 8:30PM ET
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Dr. Arnout ter Schure  Do you see a Cup-and-Handle formation on the QQQ and SPY using daily configuration ? Both are forming the length of the Handle: this could last for a few months until Election uncertainty has diminished.
Rushabh Patel
Rushabh Patel Sep 22, 2020 5:40PM ET
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sir , excellent well explained article.....I agree....but see a bigger downfall
Daniel Macharia
Daniel Macharia Sep 22, 2020 4:47PM ET
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i salute you Dr.... your analysis is one of the best;incomparable
Dr. Arnout ter Schure
Dr. Arnout ter Schure Sep 22, 2020 4:47PM ET
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thank you!
 
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