Dr_Roboto

NASDAQ Waves - Bullish bubble to 14,000

CURRENCYCOM:US100   NASDAQ 100
Sorry bears, but I reevaluated my analysis of the NASDAQ waves and this is what I believe to be the correct wave count (based on old school Elliott wave theory). I am not using the newer idea that motive waves can only have 3 waves (no wave 4 or 5). If I am wrong about 14,000 it is only because this motive wave only has 3 waves. So take all of this with a grain of salt.

I should have seen this months ago. I did not do the correct analysis for the FOMO rally in August. Wave 1,3,5 must have a sub-wave count (waves 1-5) inside them. The only way that I can get this to work out is in my chart. I don't just guess waves by look. I use fib levels with a base/ideal count that looks like:
- Wave 1 = 1.0 fib
- Wave 3 = 1.618 fib
- Wave 5 = 2.0 fib

Often times Wave 3 in a very bullish rally and will go beyond 1.618, often to 1.786 or even to 2.0. I adjust wave 5 guess based on what I call the "bull ratio".
Bull ratio for Wave 3 = actual fib / 1.618

I then calculate a guess for Wave 5 like this.
Wave 5 guess = Bull ratio * 2.0

You can see the FOMO rally to go beyond 2.0 (aligns perfectly with the 1.786 fib off the March bottom) in August as it slightly paused at 11445, but then rocketed right through it to a sub-wave 5 of 2.786. This means Wave 3 ended at the large waves 2.146 level instead 1.618. Thus I calculate the bull ratio and the Wave 5 guess as follows.
Bull ratio = 2.146 / 1.618 = 1.326
Wave 5 guess = 1.326 * 2.0 = 2.653 --> That puts is some where between the 2.618 and 2.786 fib level.

Next I laid out a new sub-wave starting at the Sept bottom. It is hard to see Wave 1, but it is there as the wave 2 low is higher than the recent bottom. That wave clearly ends Oct 13. That is wave one. Now laying out the 1, 1.618, and 2.0 fibs you get an almost perfect alignment with my Wave 5 guess around 14,129.

Now I could be wrong, but if there is one thing I learned during this rally is that always assume up because investors are ignorant and irrational (duh, Tesla has a PE ratio over 1,000). This also means that the S&P is probably not going to correct and is looking for its own bubble run.

Well, this is how I feel today. Maybe I will become bearish next week. I will have to wait and see what stupidity the market exhibits in the next few days.

Here are some important trend lines .

Close up
Comment: 1:30pm check in. Kind of just doing nothing, but staying above that trend line.

Comments

I see big divergence on macd 4h timeframe, it looks like we are going to see a drop before santa rally.
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So, it was you who drove the market up today with all the short covering. Thanks.
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Great work as always buddy. I'm not seeing defined ABC corrective waves, though? But, I think you're right, we could be on wave 3 currently.
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Dr_Roboto Hedge_Of_The_World
@Hedge_Of_The_World, in a motive wave the down waves 2 and 4 are usually seen as the C wave of an ABC correction. I look for a pair (sometimes 3) red corrections to know that a motive wave has ended. The NASDAQ is so bullish that the Wave B is 1.236 times higher than Wave A (higher-high). Wave C often does not go lower than Wave B (higher low), which is called a Running Flat. In that case, Wave 2 or 4 are labeled based on Wave A.

Why are the bulls always so optimistic. Maybe it is greed or ignorance. I just don't know.
+1 Reply
@Dr_Roboto, Awesome explanation, thanks for clarifying. I know right, I think it has something to do with humanity's instinctual thirst for hope/optimism. It's like a drug, clearly, because it has many traders hypnotized right now. Lol.
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