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Nasdaq 100 Update: Bounce Target Reached, Are Lower Lows Next?

By Dr. Arnout ter Schure Stock MarketsOct 01, 2020 02:21PM ET
www.investing.com/analysis/nasdaq-100-update-bounce-target-reached-are-lower-lows-next-200539625
Nasdaq 100 Update: Bounce Target Reached, Are Lower Lows Next?
By Dr. Arnout ter Schure   |  Oct 01, 2020 02:21PM ET
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In my update from early last week, I asked the question:

"Did [black] 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. 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."

Seven trading days later, and here we are, the Nasdaq 100 is trading at around 11560 today. Right in the target zone and a 4.4% gain since my last update (if you had used it to go long the index). The index could still move higher to the 61.80% or the 76.40% retrace levels, without any problem, but the daily RSI5 is already getting overbought, which is all that is required for a B-wave. Besides, my proprietary AI Buy/Sell indicator is not showing the strongest of follow-throughs yet, since it switched -correctly so- to a buy Sept. 22. It is one of my indicators my premium major market members get to enjoy and profit from.

Figure 1. NDX100 daily candlestick chart with EWP count.

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

Thus, the question is if red wave-b is close to topping (alt: b), or if it has one more drop and pop in store (grey arrows). I cannot tell that with absolute certainty yet. Nobody can. But I can tell you the ideal bounce target zone from over a week ago has been reached; time to become more cautious, take profits, reduce long-side risk, etc. That is how my target zones can be used in your trading decisions. Luckily, we have the Elliott Wave Principle (EWP) on our side. As long as the next anticipated retrace (grey arrow for possible green wave-b) stays above the orange horizontal support level at 10900 on a closing basis, the grey path can still materialize.

The caution here is, as I've shared with you before, "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 third week of September, a counter-trend rally into late-September, and then a further decline into mid- to late-October." So far, so good. The index bottomed in the third week of September, and if all of wave-b is complete, then it is right on cue for the further decline as well.

Regardless, both the EWP count and this average U.S. election year pattern, expect near term downside. So, watch that 10900 level. It will be of great help to determine if the grey path or the red arrow will materialize. If the latter, I can now narrow down the ideal target red c-wave target zone further, compared to last week, to ideally 9750-10150.

Nasdaq 100 Update: Bounce Target Reached, Are Lower Lows Next?
 

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Nasdaq 100 Update: Bounce Target Reached, Are Lower Lows Next?

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Comments (6)
John HHH
John HHH Oct 01, 2020 11:52PM ET
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if you just charting it and make conclution based on the past, you have 30% of accuracy. accuracy.
rozsa sorin
rozsa sorin Oct 01, 2020 6:18PM ET
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rozsa sorin
rozsa sorin Oct 01, 2020 6:17PM ET
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hello panumesc rozsa sorin from cluj napoca romniea I came with the help of the god of you I want to tell you that I found you with the help of god sut a boy without parity my parents died in surrender in the cottage where I live I did not know what that childhood and I shoot where I can and I stay where God is on the road my heart will let me take it and I'll take a roof over my head to rejoice and I'll take how to make the other children happy and my grandmother will take a pillow with her heart she can't miss it at all we two see you I'll take care of her fine that my grandmother is here and I don't have her, I have a hundred, help us from no one, the gift is our witness, if you believe in God, help us with whatever your heart leaves, I thank you from the bottom of my heart for listening to me and this is an answer from you
Stefon Walters
AgapeGrace Oct 01, 2020 4:24PM ET
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Actually sound analysis. My indicstors say to go short the week of Oct 16 into the election. Then go 100% long the week of Nov 6 pre-elction into Feb 2021 (uncertainty dissipated). Thank you doc.
Stefon Walters
AgapeGrace Oct 01, 2020 4:24PM ET
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*indicators
Stefon Walters
AgapeGrace Oct 01, 2020 4:24PM ET
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Stefon Walters *election (ugh)
Dr. Arnout ter Schure
Dr. Arnout ter Schure Oct 01, 2020 4:24PM ET
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thank you, I can agree with that road map
LISOLOMZI MAKABANE
LISOLOMZI MAKABANE Oct 01, 2020 4:24PM ET
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so do you think a short entry is relevant for now as I see the analysis Nas can go down anytime time soon and the NFP can finish off thing's
MP MP
MP MP Oct 01, 2020 3:28PM ET
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Thank you!
Clinton Powell
Clinton Powell Oct 01, 2020 2:34PM ET
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Im lost but it sounds like good info
 
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