In last week's article, using the Elliott Wave Principle (EWP), I showed the NASDAQ 100 had essentially four options. I concluded it would:
"... choose its path eventually, as markets always know where they have been, are and will be, but it is up to analysts to figure out the latter part. Sometimes that is easier than other times. Right now, the index's future outlook is muddled, but it will show us its hands sooner than later by a subsequent breakout or breakdown above or below critical price levels. And when it does, we have our road maps ready."
On Thursday, we had the breakout and, therefore, the most likely road map is now ready. See Figure 1A below.
Thus, as I said last week:
"The financial markets are probabilistic, and the EWP helps understand these options. It can tell when critical price levels are broken to the upside or downside, which of these options are invalidated. One by one, there will then only be "one-man-standing," so to say."
Figure 1 A, B. NDX100 daily candlestick chart with EWP count and technical indicators.
As I have carried throughout my updates as the preferred EWP count, told us, "We need to see a move above the [green] minor-1 high [made early-March] soon to confirm this option." We got that move this week, and now I am looking for ideally NDX 14178-14428 to be reached for (green) minor-3, then a retrace for minor-4 to ideally NDX 13533-13733, followed by the last move higher to ideally NDX 14645-14890 to complete the impulse that started March 2020.
Since EWP always has an alternate option, the current rally is a c-wave of a larger (b-wave) bounce to stall at around NDX 13700 before heading lower once again to ideally NDX 12080. This option is not preferred, just a possibility to be aware of. Placing stops prudently on long positions will take care of that possibility by itself. But why do I not like this option? Because the financial markets trend higher longer-term, an impulse count to the upside must be the preferred POV when an index starts to move higher again. However, I must also remain intellectually honest and share the possibility, albeit the low odds.
Bottom line: The NDX was at a crossroads last week, but has chosen its path this week by breaking out above the early-March high. Now, we have our road map ready, and I prefer to look higher per an EWP impulsive move to NDX 14178-14428 for a minor 3rd wave, then a retrace to ideally NDX 13533-13733 for a 4th wave, followed by the last move higher – a 5th wave- to ideally NDX 14645-14890 to complete the impulse that started March 2020.