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The NDX peaked at $22,222 in February, which is ~2.4% below the ideal 123.60% Fibonacci extension at $22,768 and thus within range. Moreover, so far, the index has bottomed out at $16,542, while the aforementioned (green) W-4, W-5 sequence targets ideally the low $16,000s, which is still within the margins of error of around $16,600. Thus, once these two smaller waves are complete, we can look forward to two scenarios
- A direct rally to new All-Time Highs for the black W-5 (green arrow in Figures 1 and 2), or
- A bounce to $20,000+/-1000 before the next leg lower to ~$15,400 kicks in (orange arrows in Figures 1 and 2)
In short, after three waves lower (the red W-a, -b, and -c), expect at least three waves back up. Namely, financial markets are stochastic and probabilistic, i.e., they follow if-then scenarios, and thus, those who seek certainty will never stop searching; we cannot yet be sure which path the index will take. We do know, however, that a break below the 50% retracement level at $15,430 will be a serious indication the index has put in a much larger top, but we’ll share that in a later update if necessary. For now, we focus on the index wrapping up these smaller 4th and 5th waves, which will be followed by a rally of at least 15-25%.
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