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NASDAQ 100: Was That All The Correction We Got?

By Dr. Arnout ter Schure Stock MarketsDec 08, 2021 02:59PM ET
www.investing.com/analysis/nasdaq-100--was-that-all-the-correction-we-got-200610924
NASDAQ 100: Was That All The Correction We Got?
By Dr. Arnout ter Schure   |  Dec 08, 2021 02:59PM ET
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Two weeks ago, after the NASDAQ 100 topped close to the ideal ~$17,000 target, I presented the option using the Elliott Wave Principle (EWP) for the index to correct 10-15%. Fast forward, and the NDX bottomed at $15,543 on Dec. 3 – a 7.4% correction.

Meanwhile, the Russel 2000 did not fare any better as it suffered a ~13% correction. Thus, the question is: Is that “all she wrote?” Let’s have a look at the daily chart.

Figure 1: NDX100 daily candlestick chart with detailed EWP count and technical indicators.

NASDAQ 100 Daily Chart.
NASDAQ 100 Daily Chart.

So far, the index has reached all the ideal Fibonacci-based extensions and retrace levels for various degrees of 2nd, 3rd, 4th, and 5th waves. Thus, and as I have stated before, this methodology remains one of the best tools available to accurately and reliably forecast where prices should ideally top and bottom.

Now, if (red) intermediate wave-iv is under way, as that is the preferred assumption, we must acknowledge that 4th waves are often flat corrections. Flat corrections consist of an initial three-wave drop (in this case blue wave-a?), followed by a three-wave advance (in this blue wave-b?) and a final five-wave decline (to red wave-iv). The Dec. 3 low got right in the ideal target zone I had set forth for my premium major market members several days prior. From there, I then forecasted the index would ideally rally to the orange resistance zone (smaller blue box). The index complied. Now, in flat corrections, the b-wave can become irregular, meaning it will go beyond the start of wave-a, which in this case is (red) intermediate-iii.

Since the index did not reach the (red) 161.80% extension at NDX16949 on the previous run, it would not surprise me if this rally/b-wave will do the trick. Or, as Darth Vader tells his son Luke in Star Wars: Episode V - The Empire Strikes Back (1980): “It is your destiny.” Thus, we have to watch for a possible breakout above the blue target box to propel the index to where it should have reached initially. The NDX can then stage its five-wave decline, which can either be shorter, equal or longer than the a-wave. But please keep in mind, the index is now at an inflection point. It only requires a catalyst to start the potential c-wave lower.

A break below yesterday’s massive futures-driven gap-up open would be an excellent first signal the red wave-iv lower target zone is up first before 17,000 is seen. Thus, thanks to the EWP, we now have our if/then parameters in place. And it appears, in the short-term, the easy money has been made. Letting the market decide what’s next would be a prudent approach. Long-term investors should ignore the current scribbles, whereas swing traders may also start to tighten up their stops and trades. 

NASDAQ 100: Was That All The Correction We Got?
 

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NASDAQ 100: Was That All The Correction We Got?

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Comments (9)
Jesus Iglesias
Jesus Iglesias Dec 13, 2021 10:40PM ET
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:D Time will tell. It'd also be nice to read a technical analysis for Bitcoin or Ethereum. Thank you so much!
Jesus Iglesias
Jesus Iglesias Dec 13, 2021 10:40PM ET
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Dr. A. ter Schure, you've also achieved a very high accuracy rating in a very well known website. Good luck.
Loudermilktits Loudermilktits
Loudermilktits Dec 08, 2021 10:05PM ET
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EWP is basically snake oil
CJ Mc
CJ Mc Dec 08, 2021 8:17PM ET
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That, or we've completed "wave 4" and "wave 5" is already well underway. Pretty sure we're in the final stages of this bull market with a melt-up just waiting in the wings :)
Dr. Arnout ter Schure
Dr. Arnout ter Schure Dec 08, 2021 8:17PM ET
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Always possible indeed, as technically enough price "damage" was done and three waves down from the ATH completed. Thus we must respect that and at least expect three waves back up. Price clearly has stalled so far at my initial ideal bounce target zone I told my premium members it would last week, so now the markets have a choice. Simple! Now let the market speak, listen and we will know, ensuring the next lowest risk trade, which is not now! However, timing-wise this correction for a larger 4th wave was too short. Now price is the final arbiter and now time, but it would be weird to see a degree higher 4th wave last 1/2 as long as a degree smaller 4th wave (September correction)...
CJ Mc
CJ Mc Dec 08, 2021 8:17PM ET
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Dr. Arnout ter Schure  ALL good points 🤓Today, it certainly looks like the SPY is consolidating below resistance, if that breaks to the upside then that should pull the rest of the market with it. Price is king!!  As always, I enjoy your work 👍🏼and will never understand why certain individuals get their ******all up in a bunch when you're simply breaking it down for us and giving us the highest probability scenario. Silly monkeys!!
Tim Prescott
Tim Prescott Dec 08, 2021 8:17PM ET
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Doc, Great analysis. I rely heavily on your premium service. No one knows where the markets going for sure, therefore we use stops.With your use of both technicals and the Elliott wave, I feel comfortable that I will be on the right side of trades 70% of the time. When I’m not I get stopped out with small losses. Couldn’t ask for a better service.
vitortugauk Alb
vitortugauk Dec 08, 2021 8:17PM ET
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Dr. Arnout ter Schure  Is it possible this drop was minute wave 4 before a minute 5 completing intermediate 3 at the usual 1.618 fib ext. target, my preferred scenarios are either that or an expanding flat in intermediate 4 to hit both the original top and bottom targets (B at around 17k and C at  around 15k). Interesting that the 1,236 fib extension of wave A(common target for B waves in Expanding flats sits at 17050 and a Fib extension from there for wave C puts the 1.618 at 15100, so I think your intermediate wave 4 targets may be spot on.
Jorge Hg
Jorge Hg Dec 08, 2021 7:09PM ET
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It looks like it will touch the 15200 but we will see what will happen. All scenarios are possible.
Dr. Arnout ter Schure
Dr. Arnout ter Schure Dec 08, 2021 7:09PM ET
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yes, everything is possible, but which is most probable. I outlined the most probable scenarios. trade them accordingly or not at all. we have the breakdown and breakout levels to watch. so it is not too difficult.
Peter ONeill
Peter ONeill Dec 08, 2021 6:17PM ET
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$7 Trillion in US Fed printing money in 18 months and another $3-$4 Trillion coming down the tracks in even more 'stimulus'. The US is awash with money/debt which has to go somewhere.  EVERY dip has been bought so markets recovered in 3-5 days, every bad news story has been ignored (e.g. massive rising tension with Russia and China, inflation, etc ), every good news story has led to an even higher rally, Metaverse / EV / Cryptocurrency stories causing massive rises in related shares/assets. BUBBLE is written all over the current markets. It's not a question of if the bubble must pop - but when,  what will be the catalyst, plus how far will it fall (as versus natural growth versus pre covid levels - the market is 30%+ overvalued)
Dr. Arnout ter Schure
Dr. Arnout ter Schure Dec 08, 2021 6:17PM ET
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Yes, the bubble will pop. The FED is not in control. Nobody is. The only thing we can control are our own trades: entries and exits.
Shane Zhang
Shane Zhang Dec 08, 2021 5:44PM ET
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Oh Hi can you please give us a view to Gold to Dow Ratio in term of your wave count
KN TR
KN_TR Dec 08, 2021 5:18PM ET
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Thanks, maybe this 16350 the resistance this time?
Edward Ormsby
Edward Ormsby Dec 08, 2021 5:00PM ET
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“The NDX can then stage its five-wave decline, which can either be shorter, equal or longer than the a-wave.” Very helpful lol
Dr. Arnout ter Schure
Dr. Arnout ter Schure Dec 08, 2021 5:00PM ET
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Dont equate one’s failure to understand the c-waves in different flat corrections with my work not being helpful. Read up on the EWP or stay ignorant. Your choice…
Matt Novakovich
Matt Novakovich Dec 08, 2021 3:55PM ET
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safe prediction: market, up, down or stay the same
Dr. Arnout ter Schure
Dr. Arnout ter Schure Dec 08, 2021 3:55PM ET
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Yes the markets have at any given moment in time that option. Tell us something new. We need to then identify which it will most likely be. Breach of key price levels will tell us that. As said, the easy part of this rally maybe already over. Now we let the market decide. My premium members already knew last week to look higher. Target zones reached!
 
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