Update

The QQQ chart below shows the current state of the Three Peaks Domed House patterns underway. Click the chart for a clearer image.

 

tpdh ndx sept 21 2014

On Friday, the NDX/QQQ did end up making new highs. On the larger TPDH pattern (labeled in white), the next point in the pattern should be Point 23, which is the top of the domed house. That top should be followed by a return to the Point 10 low.

It is very difficult to know how high above current levels Point 23 will occur. However, a noteworthy statistic is that since the April low, the NDX has not had a drop exceeding 4%. Thus, considering the current TPDH and Elliott Wave patterns , a drop bigger than that (regardless of how much the index rallies from here) would strongly indicate that the intermediate term direction has turned lower.

Here’s a chart showing my Elliott Wave count from December 2011 on the NDX:

ndx 2011-2014

I have Intermediate degree waves labeled in white. In Elliott Wave patterns, a relationship is sometimes observed such that the fifth wave equals the first wave in length. In the current situation, Intermediate Wave 5 has already exceeded Intermediate Wave 1 on a point basis. To match Intermediate 1 on a percentage basis, the current rally would need to reach 4318, which is about 5% above current levels.

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