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NASDAQ 100 Update: Road To 18,000 Not Going To Be Easy

By Dr. Arnout ter Schure Stock MarketsFeb 07, 2022 01:52PM ET
www.investing.com/analysis/nasdaq-100-update-road-to-18000--not-going-to-be-easy-200617349
NASDAQ 100 Update: Road To 18,000 Not Going To Be Easy
By Dr. Arnout ter Schure   |  Feb 07, 2022 01:52PM ET
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Who said the markets were easy to track, trade and forecast?

Nobody. If they were that easy, they simply would not function because everyone would always be on the right side of the trade. Let me start with a quote credited to renowned economist J. M. Keynes, but, in fact, it may have been Paul Samuelson who was awarded the Nobel Prize in economics in 1970 who said:

“When the facts change, I change my mind. What do you do, sir?”

(Source: here)

Since the financial markets are stochastic, probabilistic, non-linear environments, I boil this quote down to “all we can do is anticipate, monitor and adjust if necessary.” However, thanks to the Elliott Wave Principle (EWP), there are certain rules the markets must adhere to. And when combined with technical analysis we have a powerful way to analyze what is most likely to be next for the financial markets. The former provides explicit if/then scenarios and the latter supports the probability of the possibilities assessment of the EWP options available.

For example, in my last update of the NASDAQ 100, I stated:

The index will have to move below the 76.40% Fibonacci-extension at $14,450 to start to suggest something more bearish is afoot.”

And:

It will require a break below $14,450 to upgrade the EWP to a one-degree higher 4th wave.

The index closed on Jan. 21 at $14,438, thus telling us it wanted to go lower. Which it did. It bottomed on Jan. 24 at $13,725. I, therefore, adjusted my preferred EWP count from a wave-iv of three corrections to a one-degree higher wave-4 correction as the index overlapped with the February 2021 high: wave-i of 3. Because we know from the EWP that first and fourth waves are not allowed to overlap in a standard impulse, only in diagonals (see here).

With that out of the way, the next task came along: assess if the index indeed had bottomed out for wave-4 or if wave-4 would become more complex. Two trading weeks later, and the index has not tipped its hand yet, so allow me to assess the two most likely options it has. And please remember, “while I know everyone always wants to know exactly what's next, there are simply times when things are less clear, and we must let the market communicate.”

Figure 1: NDX 100 daily candlestick charts with detailed EWP count and technical indicators.

NDX 100 Daily Chart.
NDX 100 Daily Chart.

At this stage, the NDX is at a crossroads from an EWP perspective. Namely, this week’s rally did overlap with wave-1 of wave-c of wave-4 lower (called bearish cut off in Figure 1A). Thus, this suggests the wave-4 correction is complete, and the fifth wave to NDX 18000 is in the starting gates. The only way for the index to make a low below the January low is to morph into an expanding ending diagonal (EED) wave-c. See figure 1B. EEDs are, however, unusual price patterns. Thus, and as I told my premium major market members on Friday:

if the bulls can push the NDX above last week’s high from around current levels, then that seals the deal, and the larger wave-5 to NDX17K+ is confirmed. But if the bears can push the NDX below 14300, and especially 14080 from around current levels, then that seals the deal for the expanding ending diagonal wave-c to ideally NDX13600+/-300.”

In addition, technical analysis tells us the MACD is on a buy and pointing higher, whereas money flows back into the index as the MFI14 moves up. But, albeit not shown, the NDX is below its 200-day simple moving average (SMA), which is critical delineation. As such, I am currently 40/60 (Fig. 1A/Fig. 1B) about the market’s true intentions because expanding ending diagonals are uncommon, but the index is still weak.

Bottom Line: From an EWP perspective, the NDX can still try for a last stab lower to NDX 13600+/-300 to complete a more significant fouth wave, but it will have to drop below NDX 14080 to confirm this option, with a severe warning below NDX 14300.

On the other hand, a direct rally over this week’s high will mean the more significant fifth wave to ideally NDX 18000 is then confirmed. Since the former option is based on a less common diagonal price pattern, whereas the technical indicators are pointing up and are on a buy, but the index is below the 200-day simple moving average, odds slightly favor the wave-5 option. However, just because an alternative has low odds doesn’t mean the market will not take it. As such, by diligently tracking the price action over the next few days, I will know soon enough which door – A or B – the market will go through.

NASDAQ 100 Update: Road To 18,000 Not Going To Be Easy
 

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Three weeks ago (see here) I was tracking a possible impulse move down for the Nasdaq 100 from the mid-August high (i.e., five waves lower as per the Elliott Wave Principle (EWP))....

NASDAQ 100 Update: Road To 18,000 Not Going To Be Easy

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Comments (13)
Adam King
Adam King Feb 09, 2022 9:12AM ET
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I joined his PREMIUM Major Markets advisory service and it's always the same waffle on there might go up might go down blah blah blah and when it does one of them, he says hey I was right! And his Crypto Trading Alerts are no better - last week in the same email (a few days before the latest 20% rise) he advised going LONG BITCOIN on short-term trade (stopped out next day) and SHORT BITCOIN n a long-term trade. What a mess! And he seems to have conveniently forgotten he was predicting Apple down to 105 many months ago and just before it zoomed up to 180+. Talks a good story but of no use.
Ray Steed
Ray Steed Feb 08, 2022 5:48PM ET
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keep guessing, eventually you will get it
Don Vo
Don Vo Feb 08, 2022 7:32AM ET
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Nagdas will crash for sure
Mitch Gordon
Mitch Gordon Feb 08, 2022 2:09AM ET
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Thanks for your insight!
Caroline Tan
Caroline Tan Feb 07, 2022 11:50PM ET
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This article should change the title to : Road to 10000 is very easy. Market direction always follows the easy path. The easy way is to go down, so let’s talk about market going down now. No point to talk about not easy to go up to 18000 because it is not going there as the odds is low (difficult) to go to 18000.
cb cb
cb cb Feb 07, 2022 11:45PM ET
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So the market might go up or down. Great info, thanks.
Psxkse Forex
Psxkse Forex Feb 07, 2022 9:23PM ET
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it's means need more dip
Stan Smith
Stan Smith Feb 07, 2022 8:42PM ET
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Wow that's a bit of a shill article...it will be 8K before 18K
Klever Jay
Klever Jay Feb 07, 2022 5:09PM ET
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hello Dr arnout ter schure
Peter ONeill
Peter ONeill Feb 07, 2022 5:06PM ET
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You have global interest rates on the rise, 40-year high global inflation, record global debt, the end of global QE, energy prices spiking, Central banks all saying they will be selling off their Balance sheets asap, Global tensions with Russia & China, supply bottlenecks, labor shortages, global taxes on the horizon, falling consumer confidence & Covid restrictions still in certain countries (esp China)......YET STILL you have some people predicting the 12-year rally will continue at pace despite all of these massive headwinds in 2022? Plus all based on the previous Fed-created environment over the past 12 years versus the new emerging reality.  Will the Nasdaq 100 hit 18,000??? YES - maybe around late 2024 or 2025. But I can see a large bear market hit between now and then (Perhaps Q1 results from Meta, Netflix, PayPal and even Amazon - once you strip out the Rivian profits - being the canaries in the coal mine)
Mike Alderson
Mike Alderson Feb 07, 2022 5:06PM ET
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Do you mean 12 months?
Peter ONeill
Peter ONeill Feb 07, 2022 5:06PM ET
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Mike Alderson  No 12 year...the market by and large has been rallying since 2010 on the back of massive debt / QE and very accommodative Fed policy. It only dipped slightly in 2018 when China tensions increased and the Fed attempted to raise interest rates (stock market having a hissey fit after Fed increased to 2%) ...& in March 2020 when Covid Panic hit but it recovered from that in 2 months - again on the back of continued QE / Stimulus and Debt. By and large market has been in bull / rally territory since the 2008 - 2010 crash (hence why US  ational Debt is now over $30 Trillion)
 
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