Current NASDAQ Elliott Wave Count

Oct 15, 2008: 11:27 AM CST

I wanted to offer my interpretation of the Elliott Wave Count structure on the NASDAQ chart, which is very similar to that of the S&P 500 and Dow Jones.

For “Basic Elliott Rules,” see my prior post.

Let’s get started with the current possible (preferred) Elliott Count on the NASDAQ:

Elliotticians know that – if this predominant count is correct – then bad things (bearish) are in the horizon for the US Equity Markets.

Starting with the October 2007 price high (which was the completion of a larger 5-wave pattern not shown), we begin our Wave 1 Down into March, 2008.  To confirm internal wave validity, there was a complete 5-Wave sequence (fractal) that comprised our Wave 1.

Wave 2 formed a “Flat” or ABC Corrective (3-wave) pattern from March until August 2008.  Corrective waves are comprised of 3 waves.

From the peak of Corrective Wave 2 (notice it clearly did not retrace 100% of Wave 1), we began our current Wave 3 impulse (surge or “Thrust”) down, which is not yet complete.  I show that we just completed fractal wave iii of the larger Wave 3 structure, meaning that we’re either in, or have just completed sub-wave iv.

It could be the case that we’re currently in sub-wave v (of the larger Wave 3) and if this is indeed the case, we have new lows yet to be made in the short term as Wave 3 completes/resolves itself.  Wave v could ‘truncate,’ meaning it could test but not exceed the lows of Wave 3 (just beneath 1,600), but if that is the case, then a larger Wave 4 counter-trend rally (retracement – correction) is yet to come, which could take price up to as high as 2,000.

Additional Fibonacci work will be needed for exact projection prices upward (and, eventually downward).

If this count is correct, then following the Wave 4 corrective rally, we’ll make yet more new lows as we descend into a potentially nasty Wave 5 impulse yet to come, which could take prices down to test (or perhaps exceed) the 2002/2003 market bottom – but let’s take everything one day/one week at a time and not get too far ahead of ourselves.

I’ve drawn below the ‘idealized’ or “noise free” version of the above chart for better clarity:

If this is indeed the case, then clearly the bottom is yet to come, which is also becoming the consensus of many of the “Talking Heads” on TV.  Wave 3 is important (to Elliott) because it is the wave that ‘everyone’ realizes what’s going on and piles on (or out).  Also, Wave 3’s tend to be where the most powerful (or unrelenting) price action occurs.

It’s because of the absolute violence of the prior swing down that leads me to believe (or confirms my suspicion) that we’re in a Wave 3 Impulse Down.

If this count is correct – look out.

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2 Comments

2 Responses to “Current NASDAQ Elliott Wave Count”

  1. Tom Says:

    Umh!! Full of good news are you? I see it now clear as a bell. Prechter was early with his book titled Conquer the Crash and probably clairvoyant.

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